Rowlett Lakeshore Times > News
Slashing some of the red
The city of Rowlett is about to save more than $2 million dollars through the issuance of general obligation refunding bonds.
“We have some good news today,” said Brian Funderburk, assistant city manager. “it is much better than what we thought. [It’s] about $120,000 a year in savings. Two-thirds of that is actually in the utility fund so it helps there also.”
The city council approved the issuance of $17.7 million in refunding bonds.
“$11.3 million of that are water and sewer bonds that we sold in 2004,” Funderburk said.
The continual evaluation and management of debt service and terms of the city’s existing bonds is an integral piece of the city’s cash management system.
Due to the low interest rates in the market at this time, the city has the opportunity to refund, or refinance bonds, and obtain significant savings in interest payments on existing bonds.
The city last refunded bonds in Oct. 2011, when it refunded $9 million in governmental and water/sewer revenue bonds to save approximately $772,000 over the remaining life of the bonds.
The city’s financial advisor has identified approximately $17.74 million in governmental and water/sewer revenue bonds that are available for refunding in the current market, providing significant debt service savings.
“This is a refunding of debt the city already has,” Funderburk said. “It is very good to have an advocate out there on our behalf watching for these opportunities so that we can save money.
Funding for the refunding bonds will come from ad valorem taxes. All issuance costs will be paid out of the bond proceeds. The city will save about $106,392 annually on the bonds due to the lower interest rates. The utility fund will benefit most with about $67,500 in savings per year with the general debt service fund saving about $38,892 per year.
The city council unanimously approved the ordinance to issue the bonds during its Tuesday, June 5 regular city council meeting.