Refunding Bond Could Save Jefferson $89K

The Jefferson Township council introduced a refunding bond ordinance that has the potential to save the township about $89,000 over six years.

The ordinance, which had its first reading at this week’s council meeting, would refund $2,500,000. The money would go toward paying $1,940,000 on the aggregate principal amount of water bonds and $98,000 in aggregate principal amount of sewer bonds, both from 2003 that mature in 2013 – 2017. The refunding bond will also pay the costs of issuance of the bond not exceeding $75,000. These costs include printing, advertising, accounting, financial and legal expenses.

“This is very much like refinancing a mortgage on your house with a lower interest rate,” said township auditor Tom Ferry.

This bond has a variable interest rate of 2-4%, but averages out to about 3.5%, Ferry said.

New Jersey bond law places certain restrictions on refunding bonds.

“You can’t just use them for whatever you want. They have to be used for certain things,” Ferry said.

The township has made application to the local finance board for this bond. A second reading will take place at the council’s November meeting.