Concerned future interest rates may get out of hand, the Columbus City Council passed a resolution to lock in an interest rate on $9 million worth of debt Thursday.
In a special meeting, four present councilmen (Ward 2 Councilman Joseph Mickens and Ward 3 Councilman Charlie Box were out of town) refinanced $5.2 million in existing debt which will be added to $3.8 million in bond money expected to arrive before the end of this year for paving projects.
Chief Financial Officer Mike Bernsen says the market value of the bond money will determine the interest for the entire debt.
“Whatever the market is willing to pay is in direct relation to the interest we pay,” he said.
The existing $5.2 million includes $1.8 million borrowed in 2000 to build the City Municipal Complex and a $3.3 million balance remaining from $5 million in Mississippi Development Bank funds drawn in 10 advancements starting in 2002. The Mississippi Development Bank funds were also used for paving projects. That money had a variable interest rate attached while the municipal complex funds had fixed interest rate which will be adjusted.
Ward 6 Councilman Bill Gavin likened the move to a homeowner refinancing his or her house.
“The interest rates are low now but projections on the market are that rates will go up. If we get caught we could be paying a lot of interest. Now we”ll always know what it is and be making one payment instead of several,” he said.
Jason Browne was previously a reporter for The Dispatch.
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