Savings estimated at $273K on bond refinancing

LANSDALE » A refinancing producing six-figure savings is one big step closer for Lansdale Borough.

Council has unanimously authorized a refinancing meant to lock in current low interest rates on debt from three bonds issued in the past decade.

“It’s a great time to be an issuer, a borrower. It’s not a great time to be a saver, but if someone’s accepting these interest rates, I don’t quarrel with them,” said bond advisor Ed Murray. Going back the past decade,

council approved three bond borrowings for capital projects of $10 million each in 2010, 2012 and 2014, then a bank loan of $2.5 million in 2017, which refinanced the two earliest bonds. Talks started in summer 2019 on refinancing

nearly all of the 2014 issue, and council did so in July of that year, before hearing options in early January 2020 about securing more savings by refinancing the rest.

Murray and bond counsel Pat Scott outlined the latest to council on Feb. 19, saying the recent changes in interest rates available on the market mean the savings will wind up with a

net present value of around $274,000, based on a total reduction in payments of $293,000 over the life of the bonds.

“We’re going to clean up a little tiny piece of the 2010 that still exists, a little tiny piece of the 2014 that still exists, and the majority of this bond issue will go to refund the 2015,” he said.

“This is our best guess as of tonight. It’s very much

what I told you before, but everything is now done, and we’re ready to execute,” Murray said.

Since the informal direction from council in January, the advisors have reaffirmed the borough’s bond rating and prepared a 137page investor document detailing facts and figures about Lansdale.

“It tells investors everything they need to know

about the town,” Murray said.

The ordinance up for council approval spelled out the terms and conditions that must be met for a $11.225 million borrowing, which will pay down the three earlier issues without extending the payback period, and authorizes borough Finance Director John Ramey to confirm the transactions on behalf of

the borough.

Council voted unanimously to authorize the refinancing of the bonds, and Murray said he and Ramey will keep council informed of the results. Borough council next meets 8:30 p.m. on March 4 with various council committees starting at 6:30 p.m., all at the borough municipal building, 1 Vine St. For more information visit www.Lansdale.org.