Canal Winchester officials hope to take advantage of lower interest rates and new loan options to save the city an additional $700,000 over the next 10 years.
Agreeing with a request from Finance Director Amanda Jackson, Canal Winchester City Council voted unanimously Nov. 18 to approve two ordinances authorizing her to refinance two separate bond packages before the end of the calendar year -- and, hopefully, before rates begin going back up.
The bond packages are for $4 million for improvements to the wastewater system and $1.5 million related to improvements on Gender Road.
"We've been approached with the chance to refinance some of our debt before the interest rates start going back up, so we've looked into it and found it is worth our time to try and do this now," Jackson said.
"If we refund these two issuances, we can save the city about $700,000 over 10 years because the rates are lower than in 2004, and because right now, we're required to have the last year's payment held back."
Jackson explained that by refinancing under new bond agreements, a new covenant can also be written that will free up the held-back funds.
"By rewriting the covenant, we'll be able to take that money out and put it toward the principle, which will then also lower the total amount we need to finance," she said. "Normally, we'd go through a public offering to do this refinance, but after some internal discussion, we decided a direct placement route was better.
"We're asking that council approve this under emergency so that we can have it done by the end of December."
According to Jackson, if the city were to complete a full public offering process, the city would be required to complete a new Moody rating, post the bid and hold a public hearing, all of which could take several months to complete, potentially missing out on the savings.
"We decided the direct placement route was better because it will still allow us to get rates from different banks, but with the ones we decide, instead of offering it to everyone," she said. "This may result in a slightly higher rate but it will be done significantly faster than the other option."