Refinancing bonded debt reduces total cost to the citys Street Fund

Sandy Finance Director Seth Atkinson has found a way to save the city about $44,000 and shorten the term of a Street Fund loan by one year.

At the Sandy City Council meeting held Monday, Nov. 19, the panel unanimously approved the move to new financing to save money and end the debt sooner.

The 15-year revenue bond was first issued in 2006, and was for about $605,000 to pay for street construction on Ruben Lane. The interest rate at that time was 4.6 percent.

The agreement drafted by financial professionals who advise the city is for about $400,000, and the interest rate is 2.6 percent, Atkinson told the council Nov. 19.

The bonded indebtedness initially was to be fully paid in 2021. This new modification would end the debt in January 2020.

Even though this change would require slightly larger payments, Atkinson said the “Street Fund is looking very healthy,” and therefore it was his judgment the city could make the annual payments and reap the benefits.

The refinanced loan could be paid off early (after 2017) without any penalties, he said.

As collateral for the signature loan, the city pledged its receipts from the State Tax Street Fund and as backup collateral all money in the Sewer Bond Reserve Fund.

The resolution to refinance, as presented to the council Nov. 19, became effective that day as Mayor Bill King signed the document.

For more information, call Atkinson at 503-668-5767.

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