by Beth Balmanno
The Otsego City Council voted in favor of the issuance and sale of refunding bonds at its Nov. 25 meeting, a move that will save the city an estimated $1.3 million in debt service interest savings.
Many of the city’s water and sanitary sewer plants, along with their infrastructure, were originally funded with bonds that would be repaid through connection charges and utility access. During the last recession, slowed home construction decreased revenue and the city issued refunding bonds where the principal repayments were structured with future cash flow in mind.
One of the bond issues, the 2009A, did not provide for any principal repayments until 2024 and has $6,360,000 in principal outstanding. On Oct. 28, the city decided to call (prepay) the 2027 maturity of the bond issues, and refund (refinance) the outstanding principal. The city voted to sell the new 2019A bond issue in a negotiated sale with Northland Securities Inc.
Council members commended City Administrator Adam Flaherty on his work with the bond refinancing, and Jessica Green with Northland Securities, who was present at the council meeting, concurred.
“It should be noted that we might have had the shortest rating call ever due to Adam’s prep work,” Green said.