City finds savings by refunding bonds
Grand Marais city councilors and Public Utilities Commission members began council’s May 29, 2013 meeting by approving the refunding of two bonds. The action is expected to save taxpayers about $300,000 over the next 17 years.
Bruce Kimmel and Nick Anhunt of Ehlers Inc., the city’s financial advisors, attended the meeting and explained the bidding process. There were three bids received for the $3.5 million General Refunding Bonds, Series 2013A, and the $1.4 million electric system revenue refunding bonds, Series 2013B. The sale of the bonds was authorized by council at its prior meeting.
Although the final bids were lower than Ehlers’ original estimates, which projected that the city would save over $700,000 by the refunding, the advisors said the action was still a profitable one worth pursuing.
“This will save money for both the city and the PUC, but just as importantly it will shorten the terms by years,” said Kimmel, noting that six years will be shaved off the payment period for the larger of the two bond sales, and one year reduced from the smaller bond payments. The bonds will now be paid off by 2030, as opposed to the most recently revised timetable of 2036 – a reduction in six years of payments from Ehlers’ original proposal, which called for payment over the next 23 years.
Kimmel also lauded the city’s financial management. “These were very positive results… brought on by strong reserves that led to a strong credit rating,” Kimmel said. “That means the city and PUC are doing everything you can do right.”
Council then passed a resolution to accept the bids to sell the bonds, with closing expected June 20.