Refinancing expected to save $275K or more in Elgin
The city of Elgin estimates it will save $275,000 to $475,000 when it refinances loans by capitalizing on its top financial rating and favorable interest rates, officials said.
The city council approved Wednesday the refinancing of about $10.7 million in bonds issued between 2005 and 2008 that originally paid for utility-related infrastructure improvements. The city's financial advisers, Speer Financial, Inc., recommended the move, city officials said.
The city has a AAA rating by Fitch Ratings and an AA-plus rating by Standard & Poor's; it doesn't have a rating with Moody's. Those are the nation's three largest credit-rating agencies.
Fitch reaffirmed the city's top rating in late February, which officials touted as validation of the city's fiscal policies including revenue diversification. Less than 5 percent of municipalities have AAA rating, City Manager Sean Stegall said.
Councilman John Prigge, who's often spoken against revenue diversification, asked how much the city would save if it had a slightly lower, but still good, rating.
"We'd be saving less but I don't know how much less," because interest rates fluctuate daily, Stegall said.
A lower rating might be worth it if residents didn't have to pay extra taxes stemming from revenue diversification, Prigge said.
"I wouldn't be associated with a system that had its goal striving for lower bond ratings," Stegall said.
Councilman John Steffen said Prigge was minimizing hundreds of thousands of dollars in savings.
The bottom line is, the city is saving money, Councilman Terry Gavin said. "I don't see why we want to complicate it more than that."