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Big money for Music Center and Thomas Cloud on Council agenda - Comments

Big money for Music Center and Thomas Cloud on Council agenda

Category: Huber Heights City Government

The agendas for the City Council Meeting 7pm Monday April 22, 2013 and the City Planning Commission 7pm Tuesday April 23, 2013 can be found on the city's website.  I can't attend either this week because I will be in meetings for work.  I appreciate your participation on our behalf. 

The major item Tuesday at the Planning commission is a Public Hearing about the Basic Development Plan and…

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How much will interest rates affect how much the project costs?

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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



Last edit: by Thomas McMasters

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