GLENVILLE Interest rates have declined since Glenville bonded for a variety of projects 10 years ago, and town officials are hoping to capitalize on that fact.
The Glenville Town Board approved the refinancing of public improvement serial bonds from 2002 at a meeting on Wednesday, March 21, a move that is estimated to save the town around $25,000 annually, or $375,000 during the remaining 15 years of debt service. Town Comptroller George Phillips said the town has paid an average 5 percent interest rate, but financial advisors estimate refinancing could yield an average 2.97 percent interest rate.
“I have always asked our comptroller to be aware of the market and obviously the bond rates are much lower now than 10 years ago,” said Supervisor Christopher Koetzle.
After all costs to refinance bonds, Phillips said the town would realize around $300,000 in savings, or a 9.5 percent return.
“It seems like a no brainer,” Phillips said. “It is hard to get that kind of return elsewhere.”
The town is betting interest rates won’t drop significantly lower. The actual refinancing would happen in May or June.
“Interest rates are very volatile … so who knows what we will end up with,” Phillips said. “We are cautiously optimistic; we wouldn’t be doing it if we weren’t confident it was going to be saving us money.”
Phillips said when the town first looked at refinancing the bonds the net savings were falling around $400,000 to $500,000. Around a month later, interest rates increased to reflect the current savings. It was previously a 13 percent return, up from the estimated 9.5 percent return.
“If we don’t do anything … and interest rates went up we would lose the opportunity for the savings,” Phillips said. “We are not at the business of making money off interest rate fluctuation.”