ALGONQUIN – A bond refinancing is expected to save the village about a quarter of a million dollars over the course of six years.
The village on Tuesday finalized the refinancing of $2.9 million in bonds. The original debt issue was part of the bonds the village sold to build the Public Works facility in 2002.
After Tuesday’s bond sale, the village expects to save about $250,000 in interest payments over the life of the bonds, which will have the same maturity date of 2020, Assistant to the Village Manager Mike Kumbera said.
On those bonds, the village is set to pay an interest rate of 1.39 percent. Previously it was paying about 3.9 percent on the bonds, Finance Director Jack Walde said.
“The results were fantastic; we got an excellent interest rate,” Walde said.
The refinanced bonds were sold to Raymond James.
The village, which has an AAA bond rating, annually abates property taxes that would be needed to pay off the debt. Instead the village has relied on sales tax revenue to pay off the debt, Kumbera has said.
Kumbera added the savings from the bond refinancing have not been earmarked for anything in particular.
The move will help the village maintain its current tax levy, Kumbera said.
Last year, the village obtained a higher bond rating of AAA from Standard and Poor’s Rating Service. The AAA rating is the highest rating possible.
Previously the village’s bond rating was AA+.
The village obtained the new rating before it refinanced $7.7 million in bonds in December in an effort to obtain lower interest rates. That move is expected to save the village $638,000 over the life of the bonds.
Those bonds were used for the expansion of the wastewater treatment plant, which took place in 2005.
S&P said the village had very strong budget flexibility, strong management with good financial policies and practices and very strong budgetary performance, among other things.