As the city of Flandreau gears up for the huge electrical upgrade scheduled to start this spring, the City Council decided at their last meeting that they would pay off the remaining balance of the electrical bonds from 2005.
The total balance of the bonds, including the amount the city would have had to pay this May as part of their regularly scheduled payment plan came out to $950,000. The city had to decide if they wanted to use the $980,000 they had on hand to pay off the balance in whole or possibly refinance the current interest rate, which sits at about 4.5%.
It came down to money saved. If the council decided to refinance the bonds, they would save about $56,000 in interest, but if they were to pay them off in whole right now, they would save $137,000. It seems like a pretty cut and dry decision but paying $950,000 upfront depletes the bank account much more than gradual payments would.
After a long discussion between the council members, they had found that another $100,000 would be in the fund by the time construction starts on the electrical plan and would give them some financial security. Combined with the remaining monies they would have in the electrical fund, the council decided it would be wisest to pay the bonds off in whole right now as opposed to refinancing them to a lower interest rate.
The city will hold an informational meeting regarding the new electrical plan on Monday, March 11th at 7 p.m. at the Bill Janklow Community Center. The public is encouraged to attend the meeting and ask any questions they may have.