The city of Robinson will save $432,993 in the next 12 years after a decision to refinance its bonds.
City leaders took advantage of the financial market and refinanced $5.8 million in general obligation bonds this week. The two original bonds were issued in 2007 and 2010 to cover the city’s water and sewer infrastructure needs.
City Manager Craig Lemin said the original bonds were issued with interest rates ranging from 3 percent to 4.25 percent.
Refinancing will allow the city to capture a 2.26 percent average interest rate, Lemin said. The overall savings was almost $58,000 more than originally expected, he said. The city expects to save an average of about $35,000 per year starting next year.
“When I was contacted by Specialized Public Finance Inc. and advised we had an opportunity to refinance these bonds to lower the interest rate and save money, I was immediately on board,” Lemin said in a press release. “Saving money is always an easy decision to make.”
The savings will help the city with its future needs, Lemin said.
Refinancing doesn’t always result in cost savings, but current interest rates and the age of the bonds favor refinancing in this case, he said.
“You have to reach a point in the life of the bonds that there’s enough interest rate difference plus savings to offset costs,” Lemin said. “You don’t want to refinance a house every couple years because the closing costs catch up with you.”