City Saves Taxpayers $102,422

As you know, the City has been exploring various ways to reduce expenditures to meet the expected Local Government Aid cuts. As part of this process, our Finance Committee researched the idea of refunding ("refinancing") our existing debt obligations and taking advantage of the current low interest rates.

At the March 11th Council meeting, we unanimously approved the Refunding of Bonds 2001 & 2002 (Resolution 09-07) if we could achieve at least a minimum of 3% savings. As we would find out this week, this resulted in two very good things for Byron.

Our Bond Rating Improved

In order to be considered for refunding, the City was required to have its bond rating re-evaluated by Standard & Poor's rating company out of Chicago. To explain further, a "bond rating" is similar to that of your personal credit score (FICO). The higher your bond rating, the easier it is for you to get financing and you also get the best rates.

In 2005, Byron received an A3 rating that we were pleased with. This week, we were informed that our new rating is AA+, which was not expected due to the economy and state cuts. Needless to say, we are thrilled to get this new rating which places us one step below Rochester- which is rated AAA. It is my understanding that AAA rating is not attainable for a city of our size, so we have essentially received the best bond rating available to us.

Refunding Process Was Completed

Armed with our excellent bond rating, we were poised to secure our refunding at a very good rate. Since our last council meeting, the rates dropped and we were able to refund our 2001 & 2002 Bonds at a savings of $102,422 over the life of the bonds. The bond re-payment schedules were not extended as part of this process and will still be paid off by January 2013.

I would like to commend our City Staff and Finance Director for the excellent work on this project. In these difficult economic times, a substantial savings such as this is a big win.