Schaumburg plans to refinance the remaining portion of the bonds used to build its Renaissance Hotel and adjoining convention center to save $4 million in cash upfront and potentially another $13.5 million in interest savings through 2041.
Last year, the village refinanced an initial portion of these bonds and also received a $4 million savings.
These savings are not directly related other areas of the village's budget or the recent estimate it will lower its property tax levy 1 percent later this year, Finance Director Lisa Happ said.
Instead, savings from the convention center's bonds can only be set aside for future capital improvements at the nearly 7-year-old facility, she added.
The village issued $245 million in bonds in July 2004 as construction was beginning on the estimated $225 million project. The additional $20 million in bonds were issued to cover possible cost overruns.
The current refinancing will not change the expiration date of the bonds, which remains 2041. But it will reap significant savings in interest payments along the way, Happ said.
The two-phased refinancing plan was recognized as an option because interest rates have become so low. While this creates less favorable conditions for investors, it's good news for those having to make interest payments, Happ said.
The village board signed off on the general plan Tuesday night, but must also approve an ordinance on May 14 that authorizes staff to do the refinancing on a day it finds favorable in the market. This could be on any day after May 16, but should happen relatively soon to take advantage of the low rates that inspired the idea in the first place.
"We can't extend it out too long because the legal opinions and ratings can change," Happ said.
Even if staff acted immediately on May 16, the earliest closing date for the new bonds would be Thursday, May 30.
Though the upfront $4 million represents a guaranteed premium, the exact amount of annual interest savings would be determined by the rate on the day of the bond sale.