At its Jan. 14 meeting, the Sunrise Beach Board of Trustees finalized its plans to refinance certificates of participation that funded the pavement of city streets.
The refinancing and extension of the original 2003 bonds will net a savings for the village as well as financing a second phase of Hwy. 5 improvements.
About $520,000 in bonds were originally issued, and approximately $170,000 had been paid down by the time the board decided to look at refinancing in October, according to financial advisor Charlie Zitnik of D.A. Davidson. Eleven years were left on the 20-year bonds.
The board voted to refinance the remaining funds and add $600,000 for a new road improvement project.
With the bond market working in the village's favor at the end of the year, Zitnik told trustees the outcome was better than expected. The city will be able to add on the necessary amount for the road project as well as save $30,000.
The deal represented a savings of just over 9 percent, according to Zitnik, a large benefit to the city compared to the typical savings of 3 percent and more than the 8.4 percent projected in October.
The $30,000 will be used to make the last payment on the old bonds at the end of the month.
The refinancing will extend the bonds to 20 years at a new interest rate of approximately 4.4 percent, currently 5.75 percent, according to Zitnik.
While it may not seem like much on the surface, he explained that a lowering of the interest rate from 5 to 4 percent represents a reduction of 20 percent.
The closing on the new bonds will be at the end of the month.
The new financing will increase the village's annual payment from $50,000 to approximately $72,000.
A half-cent transportation sales tax funds the payments. The annual total will utilize all of the current income from that source.
A boost in sales tax revenue is expected, however, when the Sunrise Beach Market Center opens this spring. Utilizing tax increment financing and a community improvement district - contracts also finalized at the Jan. 14 meeting - the development includes Woods Supermarket as the anchor store.
The road project will widen about one mile of Hwy. 5 to add a 12-foot center turn lane and create two 12-foot driving lanes from Singing Oaks Drive to Jet Ski Rd. The roadway now consists of two 11-foot lanes.
Scheduled for construction in MoDOT's 2013-14 fiscal year, the construction cost is estimated at more than $1 million with each entity paying about half.
The project is similar in scope to a first phase of widening completed in 2009.