Refunding old bonds saves on interest payments
Just like in your own family?s finances, aggressively tackling the Village?s debt means a better path for the future.
That?s why in June the Oswego Village Board decided to refund its bonds, allowing the Village to repay some of its debt at a lower interest rate. At Tuesday night?s board meeting, staff announced that the bond issuance is now finalized, and as a result, Oswego?s residents will save nearly $1.58 million over the next 15 years.
Municipalities issue debt in the form of bonds to pay for larger projects, such as major road projects and new buildings. Similar to refinancing a home mortgage to lower your interest rate, municipalities with outstanding debt can sometimes issue new bonds to pay for their existing bonds at a lower rate, a practice called refunding, and save money over the long term.
In May, at the Village Board?s request, staff reviewed the Village?s outstanding debt and presented three outstanding bond issuances dating from 2016, originally issued to finance the new Oswego Police Headquarters, that had matured enough to be at least partially refunded. In June, savings were estimated at about $1 million. With the refunding now finalized, Village staff have confirmed that the Village will actually save $1.58 million that otherwise would have been lost to interest payments.
?By refinancing tax-exempt bonds as taxable bonds, we were able to take advantage of low interest rates in the market and deliver huge savings for our residents,? Village President Troy Parlier said. ?This is a great example of out-of-the-box thinking.?
Your costs, decreased
The bond refinance is just one of several actions the Oswego Village Board has taken recently to cut costs and save residents money.
The Board has lowered the Village?s tax rate ? the percentage of your home?s value owed to the Village in taxes each year ? for the last two years. And in late 2019, the Board voted to lower water rates by 20 cents per hundred cubic feet. The new rate cut water bills by about 3.7 percent or $17.40 annually for the average resident, putting more of those dollars back into the pockets of Oswego?s residents.
Learn more about the Village of Oswego?s financial health, including regular reports and forecasts, at www.oswegoil.org/financial-reporting.?
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