On Monday City Council, hoping to take advantage of low interest rates, adopted a resolution to refinance bonds issued to pay for Southwest University Park.
“Since taking office this has been an issue of importance to me. We are refinancing to take advantage of the lower interest rates. This is a financially prudent thing to do to streamline our debt payments by addressing the upcoming balloon payment of $17 million,” Mayor Oscar Leeser said.
The resolution will allow for the issuance of up to $20 million in City of El Paso Downtown Development Corporation Special Revenue Refunding Bonds. Refinancing the bonds will restructure the debt service payment schedule to mitigate the effect of a balloon payment in 2023 of nearly $17 million.
The action should also generate up to $6.5 million in savings over the life of the debt, compared to the planned restructuring that was modeled in 2013.
The revenue bonds were originally sold in August 2013 and were to be paid over 30 years at cost of approximately $137 million, including a $17 million balloon payment in 2023. The bonds were issued based on debt service model that incorporated refinancing them at 5.5 percent before 2023 to avoid the balloon payment.
By refinancing the bonds at a lower interest rate, the City will avoid the larger-than-usual payment in 2023 and should pay off the bonds off by 2043 at a cost of approximately $147 million, nearly $6.5 million less than the $153 million projected in the 2013 debt service model.