The Anoka County Board is going into the bond market – to save money.
The board gave preliminary approval Dec. 7 for the issuance of refunding bonds for four current bond issues.
Final approval is expected at the board’s Tuesday, Dec. 18 meeting.
The board is planning to refund $10.785 million in 2005 Anoka County Airport general obligation improvement bonds, $3.83 million in 2006 general obligation capital improvement bonds, $4.28 million in 2007 general obligation capital improvement bonds and $1.75 million in 2007 library improvement bonds.
According to Cevin Petersen, county division manager for finance and central services, refunding the four bonds will save the county $2.3 million overall.
In order to refund bonds, savings of at least 3 percent must be realized, Petersen said.
“In this case savings will be 10 percent or more,” he said.
The county is anticipating an interest rate on the refunded bonds of about 1.8 percent, according to Petersen.
“And by applying the savings to the debt service we can pay off the bonds quicker,” Petersen said.
The plan is to pay off the airport bonds three years earlier than anticipated and have a lower debt payment in the final year of other three bonds, he said.
According to Brenda Krueger, Springsted Inc., the county’s financial consultant, the county board at its Dec. 18 meeting will be asked to set parameters establishing the minimum level of savings acceptable for the bond negotiations, with the goal of having the bonds sold by the end of the year.
James Towne, senior director at the Twin Cities office of Oppenheimer & Co., the county’s bond underwriter, described the current bond market as having historic low interest rates.
“Investors are looking for quality offerings and taking them as fast as they come on the market,” he said.
And the county’s AAA bond rating, reaffirmed by Standard and Poor’s, makes this a high quality bond issue, according to Towne.
Peter Bodley is at [email protected]