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Ambulance left out of borrowing plan PDF Print E-mail
Written by MARK JAEGER   
Wednesday, 30 December 2015 19:49

Village officials like the savings refinancing will bring but are reluctant to overextend debt

Village of Saukville trustees told the village’s financial adviser they like the potential saving debt refinancing can create, but they don’t want to link the move with a pending emergency equipment purchase.

Michael Harrigan, senior municipal adviser with the financial planning firm Ehlers, laid out plans for refinancing the village’s 2008 general obligation bonds at the last Village Board meeting.

Based on the improved picture for interest rates, the refinancing is expected to save the village more than $125,000.

Harrigan — who has history with the community as the former village administrator — made his presentation via speaker phone as he waited to give a similar talk that same evening to officials in another municipality.

To give officials the most leeway, he presented scenarios that would allow financing $4.6 million in debt over 5- or 10-year amortization schedules.

Much of the original debt is related to the construction of the new police station building.

“While (the five-year payback scenario) yields the lowest total cost of interest, it also has the impact of increasing the tax rate for debt to a peak of $2.89 in 2017 vs. the current 2016 rate of $2.83,” Harrigan said in his analysis.

“Scenario 2 actually results in a declining tax rate vs. 2016 because of the amount of drop off in the existing debt.”

According to the Ehlers analysis, the shorter term of the borrowing would cost $769,758 in interest charges, compared to interest costs of $798,095 over 10 years.

“It really comes down to a policy call for you guys,” Harrigan said.

That same discretion came into play when Trustee Dan Sauer expressed concern that the purchase of a new ambulance was being rolled into the refinancing proposal.

“My hang up is with the ambulance. I would like to see 5- and 10-year scenarios without the ambulance, and possibly pushing the new fire truck off, as well,” Sauer said.

“I know the schedule says the ambulance is up for replacement, but what is wrong with it?”

Village Administrator Dawn Wagner said the replacement schedule takes into consideration anticipated repair costs.

“Of course there is some flexibility. The schedule as created is always open for discussion and evolves based on performance and needs,” Wagner said.

She said the ambulance financing could be combined with the 2017 borrowing for the reconstruction of Church and Center streets.

Both initial refinancing scenarios prepared by Ehlers called for $200,000 to be borrowed next year for a 2001 ambulance used by the fire department, along with a 2000 utility crane and design expenses related to future road improvements.

The village’s long-range capital purchase schedule also shows a $700,000 borrowing planned for 2017 for a new pumper truck for the fire department,  and $250,000 in 2020 for replacement of the department’s other ambulance.

The cost to taxpayers of the cascading projects had trustees especially concerned.

Looking at the spreadsheet prepared by Ehlers, Sauer said village officials have an obligation to focus on borrowing as a component of the overall budget.

“Down the road, it shows we break the $3 rate (per $1,000 of valuation). That’s 40% of the overall mill rate for debt service,” Sauer said.

Most trustees favored a 10-year refinancing schedule without money for a new ambulance next year as a way to hold the line on debt payment.

“We have to maximize our use of tax dollars,” said Trustee Mike Gielow. “I have no crystal ball, but I don’t see rates making any big changes in 2016.”

Village President Barb Dickmann urged going ahead with the refinancing.

“Clearly it makes good sense to do this now. The savings are incredible,” Dickmann said.

The committee then recommended a resolution supporting a 10-year refinancing schedule for $4,685,000 — which means funding for the new ambulance will not be part of the issue.

A few minutes later, the Village Board unanimously approved the motion, giving Ehlers the green light to set up a bond sale.

Although interest rates have seen some recent adjustments, Harrigan told village officials a similar municipality sold bonds at an interest rate of 1.94% on the day of the meeting.

“I think you would have done even better with the bond rating you have,” he said.

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