Germantown - Historic lows in interest rates will likely save Germantown more than $360,000 in payments over the next 10 years. The village approved a plan Monday to pay back bonds already issued by taking out new loans at significantly reduced rates.
The two largest bonds to be paid back are a 2003 loan for Tax Incremental Financing District 3 and a Build America Bond from the state. Germantown will issue more than $6 million in new debt to pay for the old bonds and in their place will be ultralow-interest loans, with rates projected under 0.6 percent for part of the 10-year term.
An escrow fund will be set up for the newly borrowed money to pay back existing debt.
The debt will add about $0.84 per thousand on the levy in 2012 and will peak at $0.88 in 2014, at which time the amount will slowly decline over the remainder of the bond.
Money saved from the 2003 loan will go directly back into TID 3. The $310,000 saved on the 2003 bond is about 9.5 percent of the projected total. Ehlers Vice President James Mann said the average savings of a refinance like this has typically been 2 to 3 percent.
Germantown does have another State Trust Fund loan, but Mann said the savings would be negated after factoring in the fees associated with refinancing and having to borrow a little extra to make the first payment - bonds issued in the beginning of a year usually have a payment in the second half of the year.
Germantown officials characterized this as a bond refund and while the old bond is being repaid, a new one is being issued. In that way, this is both a refund and a refinance since Germantown will issue new bonds for nearly $6.3 million, but at a lower rate.
Trustees opted not to include about $85,000 for new computers and other equipment because a surplus from the 2011 fiscal year would allow the village to pay the equipment upfront.
Trustee Art Zabel said he was tempted to use the surplus to pay for the technology improvements, but still borrow the money so that there could be extra funds in case the village needs them. Getting the money at such a low rate now would assure that, should the village have a major purchase it might otherwise borrow for, it would have the money borrowed at an guaranteed low rate.
In the end, however, Zabel, and the board decided to pay upfront for the technology costs from a surplus Finance Director Kim Rath said could be as large as $400,000 from 2011. While the books aren't quite closed on 2011, some conservative estimates on revenues and overestimations on costs mixed with the warm winter left the village with a considerable budget surplus.
Rath said the village saved significant money by not having to deal with snow removal for most of the winter.
Your link to the biggest stories in the suburbs delivered Thursday mornings.
Enter your e-mail address above and click "Sign Up Now!" to begin receiving your e-mail newsletter Get the Newsletter!
- Buzdum's to remain open in Germantown
- Germantown Police Reports: June 25, 2015
- Germantown High School hands out scholarships
- Germantown School Board meeting postponed due to lack of quorum
- Washington County offices to close for holiday
- Three Germantown elementary schools recognized
- Germantown Library Board to discuss 2016 budget
- Germantown Police Report: June 18, 2015
- Germantown School Board to discuss budget
- Germantown Rec Department has listing of summer events