Refinance of bonds could save taxpayers money

By Dana Casadei

The Bloomfield Township Board of Trustees voted Monday, March 21, to allow treasurer Michael Schostak to refinance the township’s outstanding general obligation unlimited tax bonds for a second time. 

Typically, these kinds of bonds have a 10-year no-call period, which means you can’t buy them back in the first 10 years. Now that it’s been 10 years since they were first refinanced in 2016, Schostak said he completed an analysis of the $9 million in outstanding bonds and determined that they could refinance them again at a lower interest rate to provide savings to Bloomfield Township taxpayers.

“I recall the last time we did the refinancing of it, and it’s a great idea. I’m glad you’re doing your due diligence to keep us informed and saving the tax payers money,” said trustee Neal Barnett. “Thank you for bringing it to the board.”

Because these bonds were approved by voters, there is a specific millage – currently .3242 mill – on the Bloomfield Township tax bill that funds them. By refinancing them, and bringing down the cost of the debt service, it will translate into a lower millage rate directly on next year’s taxes and for the next six years.

By refinancing the $9 million in outstanding bonds now, based on where rates sit, they’ve also estimated to save about $675,000 over the six years, a little over $100,000 a year. The cost of doing this deal is included in the $675,000 savings, so it essentially costs them nothing to refinance the bonds, Schostak said. 

The township bonds will still be fully paid off in 2032. 

“This sounds like a win-win,” said trustee Valerie Murray.

The approval from the board authorized Schostak to issue no more than $9.5 million – this is in case rates move – of unlimited tax obligation bonds, which would refund the 2016 bonds. Schostak said they would probably be ready to market it as early as May but it doesn’t have to be then if rates aren’t where they like. They are not under any kind of time constraint., according to the treasurer.

Also, if rates were to increase to the point where this didn’t seem like a good deal anymore, Schostak said he would cancel the transaction and come back to notify the board of trustees. 

Originally, Bloomfield Township sold $26 million of 25-year general obligation unlimited tax bonds in 2007 to use for the construction of the new senior center, department of public works complex and upgrades to the central fire station.