The City of Shelton is preparing to begin the process of debt refunding.
Finance Director Aaron BeMiller gave a presentation on the planned refunding at the August 18 City Council study session.
“Refunding is similar to refinancing a home,” said BeMiller. “Refunding allows us to access lower interest rates and to save money on the overall debt repayment, just like you would with a mortgage.”
State law allows for the City Council to issue up to 1.5% general obligation (GO) debt, based on the City’s total assessed value. General obligation debt is debt that the City has pledged its “full faith and credit” towards repaying.
The City will be combining seven separate debt instruments into a refunding bond.
The bond refunding ordinance will appear on the City Council’s business agenda on September 15, and the action agenda on October 6. Bond pricing will occur on October 14 and will close on October 28.
The City will be evaluated by Standard & Poor’s to determine credit risk. Credit risk is determined by the City’s economy, debt structure, financial condition, demographic factors, and the municipality’s management practices. Shelton previously received an A+ bond rating.
By refunding, the City will save approximately $2.7 million over the life of the bonds.