City to Refund Bonds, Could See $700,000 in Savings
The Oak Forest City Council approved a measure to refund 2004 bonds and issue 2012 bonds, possibly saving the city more than $700,000. The savings would stem from a lower interest rate, with the money earmarked for capital needs.
The city of Oak Forest could have a nice chunk of change—possibly up to $700,000—coming its way in a few weeks, thanks to a bond reissuing that was approved by the city council on Tuesday, Oct 9. The bond re-issuance comes after a decrease in interest expense, according to Finance Director Colleen Julian.
“We can't lose here, this is after all the costs,” Julian said. “My thought is that, 'God, we've taken quite a few hits over the years because of the bad economy, this is the payback.'”
Reissued bonds would be part of Series 2012 and would refund Series 2004 A bonds, with the issuance not to exceed $10 million, according to Julian.
Julian told the council that there are two options for receiving the money, once the bonds are put on the market: either a lump sum up front or spreading the payments over the life of the bonds. Julian said that the lump sum would be her preference, although she would go along with whichever method the council thought was best for the city.
“My recommendation is that we take the cash savings, because we have so many high-priority capital projects without a funding source,” she said. “This is a drop in the bucket, but we could use these [monies] for the very high priority, the vehicles or an ambulance, items we weren’t able to levy for for the last couple of years.”
Although Julian was in favor of taking the lump sum, Aldermen Rich Simon and Dan Ensing voiced differing opinions. Both said they were in favor of several smaller payments out, in order to spread the cash out.
“We could extend it out over the years and we could have an income for years,” Simon said. “I don't know what the solution is, but I truly would prefer to take it over the 12-year period.”
“If we get $70,000 a year, we could get two squads a year, we could earmark it every year,” Ensing said.
Although no decision was made during the meeting on how the city will receive the funds, Julian said that she would confer with the mayor and aldermen on which option the city will pursue. A decision will be made some time in early November, once the bonds are reissued.