The city of Johnstown is looking to refinance its 2006 bond series with the hopes of saving possibly $330,000.
Currently, the government is paying 4.1 percent interest on the more than $6 million principal. The rate is scheduled to steadily rise and eventually reach 4.55 percent. Johnstown’s finance department and City Council feel they can get a better arrangement, possibly as low as 1 percent.
“Due to the current market conditions and the low interest rates (available), there are immediate savings that can be realized from refinancing the bond,” said Carlos Gunby, the city’s finance director.
If a new payment plan can be put in place, Johnstown could keep more money for capital projects.
“It’s the difference in interest rates that enables you to have that savings,” said CIM Investment Management Inc. representative Marcia Rojcewicz, the bond project’s manager.
Rojcewicz told council the city is in a better financial position, since its credit rating has improved by two steps from Ba (Moody’s) to BBB (Standard & Poor’s), a bump from the speculative level to medium safe. “There’s improvement which can be measured over the last couple of years,” she said.
Officials are not looking to change any other terms of the bond. The plan is for the series to close on Dec. 31, 2036. Counting interest, the total remaining amount left to pay on the bond is $10.5 million.
“I was very, very adamant that we would not change spending terms and that the payments be as close as humanly possible (to what they are now),” said City Manager Kristen Denne.
1st Summit Bank is the bond’s current agent.
“It would be more advantageous for the city to attempt to stay with 1st Summit, just because there is the history there and they already have the funds, so there wouldn’t be a need to transfer funds and so on and so forth, which would ultimately thus add expense, which kind of defeats the purpose of the re-fi,” Gunby said.
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