Council Bill No. 1861 had its second reading at the Monday night City Council meeting. Originally the bill was to issue general obligation bonds to refinance two loans for a total of $5,250,000. The bill was amended to only refinance one loan whose remaining principal is $3,440,000 at a 5 percent interest rate for the life of the bonds.
The refinanced loan had an adjustable rate. The rate was set to adjust every three years over its life until 2030. The rate was described as going to “balloon” if left untouched. To avoid this expected rate increase was the reason for the refinancing. The actual debt amount won’t change.
“We have not borrowed any new debt,” said Nick Falgione of Boenning and Scattergood, the firm assisting the city in issuing the bonds.
There is a cost to issuing the bonds, Falgione stated, but the cost was built into the bonds themselves.