City saves money by refinancing 1994 bond

YOUNGSTOWN -- The city saved $261,843 by refinancing a 1994 bond issue at a lower rate and converting short-term notes into long-term bonds, Finance Director David Bozanich said.
The 1994 20-year bond was $3.6 million, used for road improvements and had a 6.5 percent fixed interest rate. It was refinanced by the city at a 4.375 percent interest rate.
The $6.5 million worth of short-term notes had a 3.75 percent interest rate, but it was a variable rate that was on the rise, Bozanich said. The notes were converted to long-term bonds at the fixed 4.375 percent interest rate.
"Timing is very important to an issuance like this, and I believe that the city got a good rate and got into the market at the right time," he said. "We are very pleased that the capital markets view Youngstown as a good investment, and that relates to better borrowing costs for the city."
The $261,843 will go into the city's debt retirement fund, Bozanich said.
"It's like refinancing your house," he said. "Your monthly payment is less."
Bozanich said the city's bonding company also upgraded Youngstown from a negative rating outlook to a stable one recently.
"The city of Youngstown's finances are improving," he said.