The City of Cullman has refinanced approximately $10 million in general obligation warrants for decade-old sewer debts, which should save more than $900,000 over the next eight years.
The council recently issued General Obligation Sewer Warrant 2013 for $10 million at a 1.72 percent fixed interest rate. The bond refinances three other sewer bonds: 1999-SRF at 3.5 percent interest, 2000-SRF at 3.85 percent interest, and 2002-SRF at 3.5 percent interest.
The three older bonds were originally issued to fund sewer system repairs, which mostly focused on replacing outdated pipes across the city.
In addition to lowering the interest rate, the new deal will also be paid off approximately six months earlier, in seven-and-a-half years as opposed to eight years.
Officials say the savings from reducing the interest rates will be spread out via lower payments throughout the life of the bond, with the larger savings felt at the end.
Cullman Mayor Max Townson said the refinancing decision was an easy one after seeing the numbers, which allowed the council to take advantage of recent lower-than-usual interest rates nationwide.
“Anytime we can save over $100,000-per-year, for about eight years, that’s something we’re going to do,” he said. “I think it was a way we could be frugal and continue to be good stewards of the people’s money.”
Looking toward the future, Townson noted that by paying the debt service off earlier than expected, it could free up funds for other potential projects in the next decade.
“By being able to pay this off about six months early, it opens the door for us to move forward with any other important projects that could be out there on the horizon,” he said.
Trent Moore can be reached by e-mail at firstname.lastname@example.org, or by telephone at 734-2131, ext. 134.