By Ken de la Bastide
Tribune enterprise editor
Lower interest rates have the Tipton County Redevelopment Commission exploring whether to refinance construction bonds.
The bonds were issued for construction at the Chrysler plant in the western part of the county. Gary Malone, executive partner with accounting firm H.J. Umbaugh and Associates, said Thursday that since interest rates have declined in the past few years, there is the opportunity to save money.
The bonds were issued in 2009 to help finance the construction of the then-proposed Getrag Transmission plant at the intersection of U.S. 31 and Ind. 28. That plant was purchased by the Chrysler Group last year.
Malone said the bonds are being paid off through the creation of a Tax Increment Financing district with a property tax back-up. A TIF district captures the increase in tax revenues for use to pay for infrastructure improvements.
“When the bonds were issued, the interest rates were good,” Malone said.
At the time, the rate was 5 percent.
“Now they’re better,” Malone said.
He said if the bonds could be refinanced at 2 percent, the county would save $25,000 to $30,000 per year.
The Redevelopment Commission could refinance $2.6 million and lower the yearly payment from $430,000. The bonds are scheduled to be retired in 2020.
Attorney Rick Hall, with Barnes & Thornberg, said the county could realize a savings of $200,000 over the life of the bonds through refinancing.
He said those funds would go to help retire the $13.8 million in bonds owed to a trust of contractors that were not paid when Getrag Transmission filed for bankruptcy.
The bonds to the trust are scheduled to be retired in 2030.
Commission members directed Malone to see if there is any interest among banks to purchase the bonds.
In other business, the commission gave preliminary approval to change the designation of the Economic Recovery Area at the northeast intersection of U.S. 31 and Ind. 28.
Hall explained when it was created, it was known as the Getrag/Chrysler ERA and then the Abound Solar ERA.
He said since Chrysler purchased the property the designation should change.
Hall said this step was a needed to capture the personal property taxes paid by Chrysler for payment on the bonds issued for the property.
The plan commission, Tipton County Commissioners and redevelopment commission are required to approve the resolution before it takes effect.
For more on this story and other local news, subscribe to The Kokomo Tribune eEdition, or our print edition.