INDIAN SHORES — With nearly $4 million in debt, the Town of Indian Shores decided to avail itself of the low interest rates currently available. A resolution passed unanimously 5-0 at the Dec. 8 Town Council meeting to restructure the town’s debt at the exceptional interest rate of 1.21%.
The debt is a consolidation of an already refinanced balance from 2012 on the construction of the Indian Shores Municipal Center and the 2015 expenditure for undergrounding utilities. The old obligation was at a 3.6% interest rate.
Indian Shores had a good year financially with a surplus in excess of $1 million reported for the fiscal year ending Sept. 30. This made it possible for the town to pay off $250,000 towards the principle as part of the restructuring of the new loan. The note will run just shy of ten years with a closing date of Dec. 16, 2020 and a maturity date of Feb. 1, 2030.
“This will save the town $347,000, a lot of money,” said Mayor Patrick Soranno during a recent interview.
Town Administrator Bonnie Dhonau said that the $347,000 is the present value savings for the town, but that the net economic savings is more.
“The town will also have additional money to fund capital projects,” said Dhonau. The way the loan is structured, the older portion paying the balance of the municipal center will still be paid off earlier as originally planned. This will provide an annual budget savings of $70,000 every year until 2027, when that will drop to $33,000. That $70,000 per year will be available to fund capital projects. “It might be able to pay for a new police vehicle or something like that,” said Dhonau.
Another benefit of this renegotiation is that the loan is tax free. The note is designated as a “qualified tax-exempt obligation.”
“I want to commend the staff on getting this done,” Soranno said about the collective effort of the town’s administrative and financial employees on a complicated process.