Refinancing saves Buchanan taxpayers $425,000Published 12:03pm Tuesday, May 22, 2012
Buchanan taxpayers will save approximately $425,000 after the Buchanan school board voted to approve refinancing a bond on the high school’s auxiliary gym to a lower interest rate Monday evening.
The board accepted the lowest bid of 1.85 percent by Chemical Bank. The old rate was 4.14 percent.
What does this mean for taxpayers?
Supt. Andrea van der Laan said the district could pay off the bond in 2019 rather than in 2023. That means taxpayers will avoid paying four years worth of taxes — a savings of $425,000.
Until then, tax will be collected at the current rate of 4.2 mills.
“It is kind of like remortgaging your house,” van der Laan said. “The bank doesn’t give you back the money up front, you avoid paying the extra taxes because your interest rate is lower and you are paying the loan for a shorter period of time.”
The school board received bids from Chemical Bank and Comerica Securities, with Chemical Bank being the less costly of the two.
Van der Laan said the board tried to refinance the bond in April, but interest rates jumped. The district is in the process of finalizing the refinance of the bond.