Madison HeightsSeptember 26, 2012
Madison Heights refinances fire stations bond
By Andy Kozlowski
C & G Staff Writer
City Council unanimously voted Sept. 24 to refinance the remainder of the fire stations bond, saving residents of the city nearly a quarter of a million dollars over the next decade.
Mayor Pro Tem Robert Corbett thanked City Manager Jon Austin, Assistant City Manager Melissa Marsh and the rest of staff for researching the move.
“This project is … partially the result of an off-handed conversation a year ago … with Mr. Austin, just wondering if there was any of the city’s long-term debt that couldn’t be refinanced, given God knows homeowners are doing it now … when they’re in a position to lower their debt by taking advantage of interest rates,” Corbett said.
The fire stations bond issue goes back to August 2002, when the city asked voters if it could borrow $5,926,000 and issue tax bonds that would be paid over a 20-year period. Taxpayers supported the proposal, and bond payments began the following May.
The bond allowed for the demolition of the original fire station headquarters and the construction of Fire Station No. 1 on Brush next to City Hall near 13 Mile and John R. Included in the work was a training tower and the construction of a draft pit.
The bond also allowed for the redevelopment of the 13 Mile frontage, and the rehabilitation of Fire Station No. 2 on John R north of Lincoln and south of 11 Mile.
The new headquarters opened in June 2004. The old building was demolished and the frontage completed in the fall of the same year.
The starting interest rate was 2 percent, increasing to 4 percent by the end of the 20-year period. It is currently around 3 percent.
With a callable date of 2013, the city couldn’t refinance before. Now the city’s financial advisor has determined that selling the remaining 10 years of debt to new investors — likely banks that are in the market for municipal debt — will secure the city a fixed interest rate of 2.25 percent, if not lower.
City Council has authorized refinancing the remaining principal of $3,925,000. The proposal for the new interest rate will be sent to potential bond purchasers with an expected bond closing date of Nov. 1.
The result will be significant savings for the city’s taxpayers, to the tune of $234,000 or more during the next 10 years.
“Dollar for dollar, taxpayers will benefit,” Austin said. “The savings won’t be used to build a park, pave a road, or pay a firefighter — any money saved will reduce the (taxpayer’s) property tax bill. One hundred percent of the savings will be passed on.”