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Refinancing Saves City $$
by Staff | Aug 29, 2013 12:33 pm
Posted to: City Budget
The city has refinanced $16 million in bonds to grab a lower interest rate.
The city will pay 2.95 percent interest on the bonds, according to a press release issued Thursday. Before the restructuring it was paying an average of 4.6 percent.
That’ll save the city $622,300 over 10 years, according to the release, and enable the city to “replenish” its depleted reserves this fiscal year, according to the release.
Read the full release here.
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I would be extremly intrested in how these calulation are made and how it is that “the city will save $622,300 over 10 years.
My simple math has it…$622,300 divided by 10yrs = $62,300/yr. How is it that the city can refi, moving the debt back an additional ten years, where it was originally due to close out in 2013 becomes 2021 and call that a savings of which $622,300 would go to the reserves fund. Really?
Sounds like taking from peter to pay John, Voodoo math.
Truth in Press Releases Notes:
1. False: Re-financing existing debt, stretching the term and not paying off principal DOES NOT replenish the city’s RESERVE ACCOUNT.
2. It eases cash flow only and affects the Debt Service line item in the city budget. When you have run deficits for the last two years, and next year, you have planned contractual increases in payroll, there is ZERO dollars to replenish anything. The city is spending and overspending every nickle it gets.
3. Whoever wrote this press release should be fired for lying.