New Carlisle, which has been plagued by debt over the past several years, has taken steps recently to save more than $100,000 on older bonds.
Council members voted to refinance bonds taken out to fund the now-defunct Twin Creeks housing development and for general road repairs. The cost of the bonds was more than $1.8 million and the city will be required to pay off the debt for many years.
However, the savings is a step in the right direction, according to New Carlisle City Manager Randy Bridge.
“It’s fantastic,” Bridge said. “Anytime you can reduce your debt, that’s what we need to do.”
The vote allows Bridge to refinance the bonds and to look for cheaper options for the city to pay back.
“The ordinance give me power to sign off on any kind of document for the refinancing,” Bridge said. “It allows us to actually try to sell the bond to a buyer.”
The city co-signed the Twin Creeks bond as part of a housing project that then went bad after the developer died. The city was on the hook for the debt and eventually took ownership of the parcels through a foreclosure process.
That bond was worth $1.1 million and was taken out more than a decade ago, according to a New Carlisle ordinance sheet approving the refinancing. About $630,000 remains on the principal.
The project caused disruption in the city’s finances as it struggled to pay it. The city sold the parcels to a company called Hal Don LLC over the summer for more than $100,000.
“That’s one big project that is no longer on our plate,” Bridge said.
Selling the Twin Creeks properties and reducing the debt the city owes on them was a top priority for Bridges when he became city manager, he said.
The city also took out bonds for street projects as well in 2010. That bond was for $725,000, according to another New Carlisle ordinance sheet. Those projects were completed, Bridge said, and about $585,000 remains on that principal.
The total saved from the refinancing isn’t determined yet. The city plans to sell the bonds and the interest rate they sell them at will determine the total savings. A state audit the city will receive soon also will determine what type of interest rate the city might get.
“We truly don’t know what that landscape is going to be,” Bridge said. “It’s all about timing.”
New Carlisle could save between $110,000 and $130,000 over the next two decades. That’s a significant amount of money for the city to save, Bridge said.
“That’s huge,” he said. “It is our duty to make sure we are protecting the taxpayer here.”
The city is scheduled to payoff the bonds until 2035, but will see immediate relief when it comes to having to pay the bills.
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“We are going to see our biggest savings right off the bat,” Bridge said. “We will feel the effect quickly.”
City council members will continue to discuss how best to use the saved money, he said. Mayor Mike Lowrey could not be reached for comment.
By the numbers:
$1.1 million: Original bond cost taken out for the Twin Creek Subdivision Project
$630,000: Principal remaining on Twin Creek bond.
$725,000: Original bond cost taken out for the general street repair project
$585,000: Principal remaining on street repair project