Bond Refinancing Saves City $1.6 Million
The City of Lake Forest continues to demonstrate extraordinary fiscal stewardship by refinancing debt to save $1.6 million over the term of the bond issue.
At the City Council Meeting on Monday, September 20, council members recognized the notification of sale associated with the 2021 Refunding Bond Issue.
City staff regularly monitors bond market conditions to assess if there is potential to refund or refinance existing debt. Refinancing bonds is similar to refinancing a mortgage; when interest rates are low, you can refinance to take advantage of lower interest payments over the life of the loan.
Given the current market conditions and low interest rates, the City held an online auction to refinance a portion of the City’s debt. During the competitive auction, nine companies submitted a total of 63 bids. Northland Securities received the winning bid with a true interest cost of 1.0065%.
The refinancing will save the City $1.6 million over the term of the bond issue! This is great news, as the cost savings reduces property tax requirements for debt service in future years.