By vincent todaro
Staff Writer
EAST BRUNSWICK — A refinancing of a portion of its debt may wind up saving the township about $500,000.
During its meeting Monday night, the Township Council unanimously adopted an ordinance allowing the township to redeem some bonds and replace them with others at a lower interest rate. The council said the time is right to take advantage of the current low-interest rates.
On Tuesday, Township Finance Director, L. Mason Neely said officials want to take advantage of the rates in order to save money on debts.
"It’s a very attractive rate," he said.
He compared the move to someone refinancing their home mortgage.
Also on Tuesday, Mayor William Neary said officials realized at the beginning of the year that they were getting a lower return on its own investments. He said he asked Neely how the township could save money by taking advantage of the interest rates.
The ordinance change and refinancing involves three financial obligations, Neely said.
One involves $995,000 in water utility refunding bonds purchased in March 1993. Those bonds were due to mature on April 1 of each of 2003 and 2004.
Another series of bonds involves $1,045,000 of the current debt for the general capital improvement fund. Those bonds were set also to mature in 2003 and 2004, Neely said.
The remaining bonds were for $7,835,000 to finance the Neilsen parking garage, which the township constructed. Those bonds were due to come to maturity from April 2004 through April 2013.
"Currently, these pay an interest rate of about 5 percent," he said. "We hope to refinance them to, similar to a mortgage, at around 3 percent."
The move would save the township at least $500,000, he said.
"When rates are low and you can save some money, you should do it," he said.
He said the water bonds were purchased in 1993 to allow the township to make improvements to its water lines. The bonds for the general capital improvements fund were used to pay for road work and other municipal tasks such as sewage improvements, he said.
According to the ordinance, the township is refinancing $995,000 of the remaining $5,080,000 of the water utility bonds. It is also refinancing $8,880,000 of the remaining $21,580,000 of bonds for general obligation, including the capital improvements and construction of the Neilsen garage.
"We’ll call the existing bonds and give them their money, and replace them with these at a new interest rate," Neely said.
Neary said Neely is always examining the township’s finances and looking for ways to save money.
The township has used refinancing as a way to save money before, he added.
"When you’re playing with other people’s money, you have to maximize what you can get," he said.
During the meeting, council Vice President Saul Fink also thanked Neely for his work.

