With an eye toward saving money, the Constantine Village Council has taken the first step in the process to ‘refund’ or ‘refinance’ three outstanding sewer and water improvement bonds totaling just over $2 million.
The process was launched Monday evening (March 19th) with council action to adopt a Resolution to Authorize Issuance of 2012 General Obligation Limited Tax Refund Bonds. In keeping with council rules, approval of the resolution came after reading the 12-page document aloud – a laborious process handled by Village President MacKenzie Strawser and several trustees over a 22-minute period.
Jesse Nelson, a CPA with H.J. Umbaugh & Associates, reviewed a handout regarding the proposed transaction and responded to questions. Nelson noted that a good deal of such ‘refunding’ activity has been underway in Michigan in recent months in response to a variety of factors related to municipal bonds – the fact that “the economy has been coming back,” indications from the Federal Reserve Board that it will keep interest rates low, a lot of investors “moving to safety,” and the fact that “banks have really come into the market hard.” (Jesse Nelson audio clip – 1:14)
According to a Schedule of Estimated Debt Service Savings included in Nelson’s handout, refunding of the bonds over a 10-year period ending in 2022 is likely to yield total savings of just over $112,000.
It was noted that adoption of the resolution does not commit the village to carry through with the process, but launches the endeavor.
The Proposed Refunding Bonds Timetable provided by Nelson envisions bond closing on June 12, 2012.