The city of Pflugerville has worked a deal to refund five of its oldest bonds at lower interest rates. The Pflugerville City Council approved refunding of the bonds in April.
According to a city press release, the reduced interest rates on payments will amount to annual savings of $115,000 in general fund debt service and $393,000 in utility fund debt service. The city expects savings over the next 21 years to total more than $7.87 million.
"This was definitely a market-based decision," Pflugerville Finance Director Beth Davis said. "The old bonds were at a much higher [interest] rate—and of course we could always use the savings."
The city is only allowed one opportunity to refund bonds during the life of the bonds, so it was important to wait for an optimal interest rate, Davis said. Prior to refunding, the city was paying the bonds off at a 5 percent interest rate—the new rate will be 3.38 percent.
"We waited until June to go through with it because you only get one opportunity," Pflugerville Public Information Officer Terri Waggoner said. "If you are going to take that chance, make sure it is a good interest rate."