GENEVA – Geneva aldermen this week recommended approval of $4 million in refunding bonds, saving taxpayers nearly $200,000 in interest over the life of the loans.
Geneva Finance Manager Thomas Dahl said refunding or calling the current bonds involves issuing new debt to cover the principal and interest owed.
Kevin McCanna of Speer Financial said the bond market is changing, and this would be a good time to try to do refunding.
“The market is changing. It goes up and down, but right now, it’s OK,” McCanna said. “It’s better than last year.”
McCanna recommended refunding the city’s Series 2003 Electric Revenue Bonds for nearly $2 million and Series 2007 General Obligation Alternate Revenue Bonds for $2.1 million, also for the electric division.
The city’s savings, officials said, would be 5.5 percent, above the savings target of 3 percent.
The refunding does not involve adding any additional new debt, and does not add more on to do other projects or extend the payoff dates, Dahl said in an email.
But the refinancing will cost the city about $40,000 to do the refunding process for both bond series, Dahl said. The refunding cost could be lower, but officials will not know until later in the summer.
The city council is expected to take final action at the June 17 meeting, but McCanna said officials will have to publish a notice and hold a bond hearing July 22, so the bond sale will not occur until Aug. 5 and not close until Aug. 19, according to a schedule.
McCanna said even when a city is going to refinance bonds and save interest charges, it is still required to hold a hearing.
“August may be better than today; it may be worse than today,” McCanna said. “But that’s what we’ll see, and if we hit the target and a reasonable dollar amount saved in August, we’ll sell bonds. And if not, we’ll talk about what the target should be and get authority to go day-to-day until we get the target.”