Thought I would examine the potential cost of the Aquatic Center if long term interest rates go up.  In the article above I mentioned that it might be ok to put off going to long term bonds in order to take advantage of lower short term interest rates.  However, since the city is not planning to lower the amount of debt we owe it doesn't make sense to examine that case.  Your finance director might for accounting reason tell you that he plans to pay $1,000,000 toward the Aquatic Center debt in the next couple of years.  However, if the city adds $18,000,000 somewhere else this is like robbing Peter to pay Paul and there really isn't any reason to do the numbers based on that "fake" reduced Aquatic Center principle.  Looking at these numbers and thinking about the national debt we have to make our best guess at what we think interest rates will be one, two or three years down the road.  It is obvious city leaders are betting interest rates will still be about 3% when they go to refinance the debt as bonds.  Looking at the numbers below as citizens are we comfortable with that gamble? 

Borrowing Scenarios  for $10,000,000 Aquatic center	Notes	Bonds (30 Years)	Total Interest and Principle
Notes at 1% for 1 year (pay interest only) then 30 year Bonds at 3.25%
Interest	100,000	5,667,427.49
Total Cost of Aquatic Center			15,767,427.49
Notes at 1% for 1 year (pay interest only) then 30 year Bonds at 5.25%
Interest	100,000	9,879,333.28
Total Cost of Aquatic Center			19,979,333.28
Notes at 1% for 1 year (pay interest only) then 30 year Bonds at 7.25%
Interest	100,000	14,558,346.08
Total Cost of Aquatic Center			24,658,346.08