Allen Park Finance Director Robert Cady (right) explains the $20,000 annual savings supporting a resolution authorizing the call and refinancing of the 2005 water and sewer, and the 2005 Downtown Development Association bonds, as Mayor Gail McLeod (left), City Manager Mark Kibby and City Council members Tony Lalli, Dan Loyd and Pamela Sych listen.
By SUE SUCHYTA
Sunday Times Newspapers
ALLEN PARK – The City Council authorized the call and refinancing of 2005 Water and Sewer and 2005 Downtown Development Authority bonds at its Nov. 26 meeting, with a projected $20,000 annual savings.
City Finance Director Robert Cady said with recent Federal Reserve rate cuts, the DDA and the water and sewer bonds now meet the city debt threshold of achieving at least 3 percent net present value savings for the city if called and refinanced.
“We estimate with these that we will be over 4 and actually close to 5 (percent NPV) once this is all said and done, once we negotiate the sales,” Cady said.
Cady stated in a Nov. 20 memo to the mayor and city council that the bonds are callable and the interest rate is high enough to provide considerable savings to the city, which, in conjunction with Standard and Poor’s recent upgrade of Allen Park’s credit rating to A+, will let the city achieve maximum savings.
Cady said the refinancing will save the city more than $20,000 per year over the remaining six-year life of the bonds. He said he hoped to complete the process before the end of the calendar year.
“We estimate the total savings on both bonds over the final six years of the issues to be close to $200,000 net after all expenses,” Cady said. “Last June, we did four other bonds – the Brownfield, the Community Center, the 2001 water and sewer, and the 2010 studio bond.”
Cady said these were the last two bonds from which the city could benefit from refinancing.
“It’s not quite the savings we got on the other ones, but it is hard to turn down savings,” Cady said. “Two hundred thousand dollars is $200,000.”