Low Interest Rates Lead Committee to Bond Refinancing

The has opted to refinance a series of decade-old bonds, citing low interest rates that would result in lower payments on the bonds.

“This ordinance allows the township to take advantage of historically low interest rates currently available, therefore reducing interest payments from the 2001 financing,” Mayor Carl Suraci said. “It’s important to know that this move is not assuming any new debt nor is it extending any payment periods.”

The second step in the process occurred during its Tuesday night meeting, when Committee members introduced an ordinance to refinance all or a portion of general obligation bonds from 2001. The first step was a resolution allowing it to make an application to the Local Finance Board for the refinancing—a requirement of the process to repay the bonds.

According to the ordinance, 2012-12, the amount would not exceed $8,000,000.  The committee expects to save $700,000 in interest payments over the remaining nine years in the bond payout period.

The refinancing would also save the township $8,000 in this year’s budget.

“As we are with tight budgets, every dollar saved certainly counts,” Mayor Suraci said.

The bonds were initially used for general operations and Open Space, though Committeeman Frank DelCore, Finance Committee chairman, could not state the specific items purchased with the funds. He could not state when the township last refinanced any bonds.

“We have this opportunity to take advantage of this situation of lower rates available to us,” DelCore said. “We’re not extending payments; we’re not taking on any more borrowing, so I don’t want anyone to think we’re taking on any new debt. This is simply a situation of us being able to reduce the rates charged on the existing obligations.

“It certainly makes economic sense for us to take advantage of those lower rates that are available to us in this economy,” he added. “Keeping the loan payment period the same is what will save us some money in the township budget as well as the Open Space fund.”