A permanent replacement for the dilapidated Lodi Fire Station 2 may soon become a reality thanks to a city of Lodi plan to refinance a loan to get a better interest rate.
City staff told the Lodi City Council about possibly refinancing three outstanding bonds at its early morning study session on Tuesday.
The council is looking at refinancing a 2002 General Fund bond that paid for the new police building, the reconstruction of Hutchins Street Square and the refunding of prior bonds issued for Downtown Lodi improvements.
After fees, city staff estimates that the savings will be $2.6 million that can be taken in a lump sum or spread over time. That amount could pay for a majority of the fire station project, which is estimated to cost between $2.5 and $3 million.
"If we could pay off the fire station without incurring debt, I think that's a true win-win," Councilman Larry Hansen said.
The city has to pay on the bonds every year until 2031 with an annual debt service of about $1.6 million. In October, Lodi will be able to refinance the bond because it is a decade since it was issued.
Deputy City Manager Jordan Ayers said the city started looking at refinancing after a company solicited them with a proposal.
"Any time you have an outstanding debt, we look at, 'Where is the debt?', and 'Is it economical to refinance?', similar to your house," he said.
City staff is also looking at an advance refinancing on two wastewater bonds that will reach 10 years in October 2013 and October 2014. One possibility is to refinance the 2014 bond and then pay off a portion of the 2013 bond with the savings.
The last time the city refinanced a bond was in 2008 with Lodi Electric Utility bonds.
The next step at tonight's council meeting will be hiring a financing team. The city plans to hire financial advisor Lamont Financial Services, bond counsel Jones Hall and underwriters Stone and Youngberg and JPMorgan at its 7 p.m. meeting in Carnegie Forum, 305 W. Pine St., Lodi.