Providence Mayor Jorge Elorza today announced the City has saved $6.4 million following the successful refunding of $146.3 million in bonds to take advantage of favorable market rates.
“Refunding these bonds to take advantage of current market conditions is a clear win for stakeholders of Providence,” said Mayor Elorza. “Our taxpayers deserve to know that their hard-earned tax dollars are being used as efficiently and effectively as possible. This $6.4 million savings is an example of what we can and will continue to achieve through vigilance and strong financial management.”
The $146.3 million in Providence Public Building Authority (PPBA) refunding bonds were issued by the Rhode Island Health and Education Building Corporation. The interest rates achieved on the new bonds were lower than originally projected, saving the City $2.9 million in fiscal year 2015 and $3.5 million in fiscal year 2016. Originally the bonds averaged a 4.76 percent interest rate, but were replaced with a net 3.01 percent interest cost. The City did not extend the term or date of final maturity of any of the bonds.
State legislation will allow the City to retain 80 percent of the savings from the refunding. Mayor Elorza has stated that the savings will help the City end the current fiscal year without a budget deficit.