Adviser says refinancing not warranted if interest rates keeping heading up
The Saukville Village Board has approved a series of initial resolutions calling for $2.8 million in general-obligation bonding.
The resolutions were prepared by Ehlers, the village’s financial consultants.
The borrowing will cover $445,000 for street projects; $530,000 for water system projects; $560,000 for sewerage projects; and $185,000 for parks projects.
Much of the money would be used for the anticipated reconstruction of Center and Church streets.
The bonds would be issued over 15 years, with interest payments due every six months from Sept. 1, 2017 through 2032.
Borrowing for the water and sewer work would be repaid by those utilities.
In addition, tentative plans are to refinance $1.1 million in 2011 street improvement debt, however the uncertainty of the bond market may alter those plans.
Mike Harrigan, chairman and senior municipal adviser at Ehlers, noted projections based on current rates show the refinancing might gain the village about $37,000 over the 15-year life of the new bond.
“That is right on the line of where you might want to consider refinancing,” Harrigan said.
“Since the election, the interest rates have pretty much gone straight up.”
If, on the day of the anticipated bond sale, the village does not see the projected savings to justify the refinancing, that component of the borrowing could be pulled, Harrigan said.
He said Ehlers had originally intended to borrow the money later in the spring, but a tentative bond sale date of Feb. 7 is now envisioned, with an anticipated closing date of Feb. 23.
“With the escalation we are seeing in bond rates, we felt sooner would be better than later,” Harrigan said.
In a rare break from its usually unified ranks, two village trustees voted against the borrowing plan because of the money included for the reconstruction of the 7,200-square-foot pavilion at Grady Park.
Public Works Supt. Ray de Bruijn explained that the roof on the pavilion in the village’s most heavily used park needs to be replaced, and there is some question whether it makes more sense to simply replace the aging structure.
“Do you want to spend $60,000 on the roof of a 30-year-old shelter?” de Bruijn asked trustees during a Dec. 7 meeting. The anticipated cost of replacing the pavilion is $175,000.
Trustee Dan Sauer challenged the cost of the project, noting, “You could build a pretty nice house for $175,000.”
Sauer said the village could face higher priorities for the money.
In a roll call vote on the park borrowing, Sauer and fellow Trustee Scott Fischer voted against borrowing for the project.