Last week Kent City Council authorized the annual refinancing of the City’s outstanding debt at their Council meeting.
It turns out for the last 5 years or so, short term debt rates have stayed so low that it made financial sense for the City to refinance the debt annually rather than locking in to longer term debt.
Staying short has saved the City at least a couple hundred thousand in interest payments that we would have had if we had locked into long term rates.
Our short term refinancing for 2018 is $5,145,000 — which led to the question, how much did we start with and what did we borrow it for?
The City’s Finance Director provided that answer:
$ 2,200,000 – originally borrowed in 1996 for Service Center Acquisition
$ 910,000 – originally borrowed in 1998 for Fairchild Ave. Improvements
$ 450,000 – originally borrowed in 2001 for City Administration Offices
$ 4,300,000 – originally borrowed in 2001 for Main Fire Station
$ 1,200,000 – originally borrowed in 2004 for Sanitary Sewer
$ 1,650,000 – originally borrowed in 2012 for Alley5/Streets
$ 3,500,000 – originally borrowed in 2017 for Safety Center
After budgeted principal and interest payments this year the total remaining principal outstanding on all of the above will be $5,145,000.
Using those figures, the City has been able to pay down about 64% of the debt that we’ve issued over the last 20 years.
Using debt, especially when interest rates are low, is a prudent financial strategy to maximize funds but it’s always nice to see that debt get paid off.