SALEM- The Salem Finance Committee Tuesday approved the refinancing of a bond that will save the city $125,000 annually for the remaining years.
The 20-year bond, issued to pay for improvements to Cunningham Road, street and sewer improvements for the Third Street Project and a portion of the street construction and sewer improvements at the Salem Industrial Park West, matures in 2025. It currently has an interest rate of 4 percent that increases to 4.75 percent in 2015, according to City Auditor Betty Brothers.
Brothers said that by refinancing, the city can secure an interest rate of no higher than 2.59 percent, resulting in the annual savings. She said that the interest rate may be even lower, resulting in a larger savings.
Brothers noted that the bond is not callable until 2016, so the next two years the savings ($1,800 the first year and $13,000 the second) will be held in escrow. She also noted that the bond is not related to the tax increment funding (TIF) used for the Bentley Road-Cunningham Road project.
The refinancing will cost $30,000 prior to the estimated annual savings.
The issue will be brought before city council on Tuesday.