Works With Control Board to Take Advantage of Historically Low Interest Rates
Refunding Will Reduce Debt Service Payments by an Average of $221,772 Per Year Over Next 12 Years
ERIE COUNTY, NY— Today, Erie County Executive Mark C. Poloncarz announced a plan to save taxpayers more than $2.6 million by refunding several prior year bonds.
Working with the Erie County Fiscal Stability Authority (“ECFSA”) to take advantage of historically low interest rates, Erie County (the “County”) intends to refund the series 2003B, 2004A, 2004C and 2005A bonds. This refunding is expected to reduce the County’s debt service payments by an average of $221,772 annually over the next 12 years, with $330,633.76 in savings for 2013 and similar savings for 2014-2015.
“By refunding these bonds now, we will be able to take full advantage of historically low interest rates and save taxpayers more than $2.6 million over the next 12 years,” said Poloncarz. “Working with ECFSA Chairman James Sampson, we have decided to increase the scope of the refunding in order to maximize the potential savings—$1.1 million more than we thought possible earlier this year.”
Poloncarz continued, “Despite the criticism I received from the Legislature, I knew that if we waited another year before conducting the refunding, we could attain even greater savings for the County—and we have. If I would have followed the Legislature’s advice and acted prematurely, the taxpayers would have lost out on more than $1.1 million in additional savings.”
The Legislature Minority Caucus has criticized Poloncarz for rejecting an earlier bond refunding proposal made by ECFSA in May 2012. However, by waiting until early 2013, and including the 2004 Series A Bond to the refunding, projected savings to the County has increased to $2,661,273.21 over the next 12 years, an additional $1,098,479 in savings over the previous refunding proposal.
Poloncarz added, “While refunding bonds is no silver bullet solution in challenging financial times because you can only do it once, every little bit helps. The more than $330,000 in savings we will realize next year, while modest, will help as we work to rebalance the 2013 Budget by plugging the $8.5 million hole caused by the Legislature’s artificial amendments.”
Refunding debt is a transaction where one older bond issue is redeemed and replaced by a new bond issue under conditions more favorable to the issuer.
Poloncarz specifically expressed his appreciation to ECFSA Chairman Sampson and his fellow directors for their willingness to work closely and cooperatively with the administration on this proposal, as well as other fiscal measures through 2012 and 2013. “Chairman Sampson has been a genuine supporter and real help to the County and I look forward to working with him on this refunding program,” concluded Poloncarz.
The County and ECFSA will conduct the refunding in late winter/early spring 2013 in conjunction with the County’s 2013 capital borrowing for construction projects. By conducting both bond sales at the same time, the County and ECFSA will save additional money on transaction expense. The transaction will require the approval of the Erie County Legislature via legislative resolution.