The Chadron City Council Monday night approved the early recall of the remaining $3.9-million dollars in bonds issued in 2016 to fund construction of the Aquatics and Wellness Center and to issue $3.2-million in new bonds to replace them.
The city received excellent interest rates in 2016 of between 1% and 2.5%, but the new bonds have interest rates of 35-hundredths to 85-hundredths of 1%, which will save nearly $101,000 in interest payments over the 8-year life of the bonds.
City Finance Officer Jeanette Puzzo told the council that the half-cent sales tax passed to help finance the Aquatics Center has been coming in higher than projected, which could see the new bonds paid off early.
The original funding plan for the Aquatics Center called for $4-million dollars from the sales tax, half a million in donations, and $1.5-million in grants, but the grants fell nearly a million dollars short.
That’s forced the city to use money from the general fund to supplement sales tax revenue to meet the annual bond payments.
Then-City Manager Greg Yanker worked closely last year with bond counsel John Tracek of Ameritas on issuing new bonds to spread the remaining debt over a longer period and reduce interest by taking advantage of lower rates.
The eventual plan required extending to 2030 the city’s use agreement with Chadron State College that has the school cover up to half of qualifying operating costs in return for pool access for classes and students.
New Mayor Mark Werner opposed the plan when it came to the council last fall, but freely admitted Monday night he was wrong.
Like the first set of bonds, the new ones can be called early after 5-years, although it seems unlikely the city could get interest rates lower than what they now have.
In fact, the city council waived its 3-reading rule on the bond ordinances to be able to lock in current interest rates since rates on the bellwether 10-year U-S Treasury notes rose last Friday from .85% to 1.09%.