by BETH ALTENA
Low interest rates are a pain to investors but a chance to save badly needed money for those borrowing. Plainfield Township voted Monday, August 29 at a special meeting, to refund (refinance) 2001 water bonds at a lower interest rate, which will save the township $55,000 over the remaining three years of the bonds.
Currently the bonds are at interest rates of 4.25 percent to 4.45 percent. With interest rates at 1.7 percent, the savings are significant enough to undergo the costs associated with refinancing.
Warren Smith said the township’s financial advisor Tom Traciak brought the proposed money-saving opportunity to his attention. He said a significant source of savings would be in using a Debt Service Reserve, required at the original time of issuing the bonds to pay off the principal. He proposed using $412,000 of the original $561,000 to pay off the principal. The lower rate and saving paying four percent interest on the bonds would result in saving $55,000 over the remaining three years. It will cost $27,500 in fees and bond underwriting to refinance the bonds.
“It’s going to save money and it’s worth doing,” said Trustee Vic Matthews.
The refunding was approved by unanimous vote, but will need to be approved by the board at the regular Monday, Sept. 6 meeting.