By Mason W. Canales
Killeen Daily Herald
KEMPNER — Payments for the city's only loans will be reduced by about $15,000 per year but are being extended eight years after action taken by the city council.
On Tuesday, Kempner refinanced two seven-year loans — $455,000 and $112,000 — for the construction of city hall, which opened last September, to one 15-year loan.
Generally, cities take refinancing measures to save money, but that is not the case for Kempner, said Jennifer Douglas, managing director of Austin-based Specialized Public Finance, the city's bond council. Kempner was wanting to make its repayments more manageable.
"That was our intent at the very beginning, and the only way we could get the building financed," said Mayor Gene Isenhour, talking about the original seven-year notes. "We knew that we were going to have some balloon payments that were going to have us raise tax rates to pay that."
By refinancing, the city will not have to increase taxes, said Isenhour.
During the average year, Kempner had about a $55,000 payment for the previous loans with a payment of $125,000 being due toward the end of the loan, said Douglas.
Under the refinancing, the city will pay $45,000 until the year 2027, she said. Cities typically want to spread out the payment for facilities over longer periods of time because the building has a life span of 20 to 30 years.
Refinancing a longer period will allow multiple generations of residents to pay the cost of construction instead of one, said Douglas.
Kempner attempted to get the loans to extend out 20 years but because it was a small figure, no bank would extend the loans that long.
The previous rates of the loans were 2.79 and 2.94 percent interest. The new rate was 2.82 percent interest on a $490,000 note.
The loan amount was less because the city has already made payments on the various loans.
Contact Mason W. Canales at email@example.com or (254) 501-7474. Follow him on Twitter at KDHCoveEditor.