The City of Hermantown is saving nearly $1 million in interest over the next ten years. On Monday, October 3, 2016, the City Council approved re-financing $5,455,000 of debt on the existing Governmental Services building.
The new debt was issued at a true interest cost of 1.353%. This lower interest rate is allowing the city to reduce the amount of interest paid on the existing debt remaining, saving the City nearly $1 million. The debt is expected to be retired in 2026.
The total future savings from the re-financing was $999,957.
"Instead of paying interest on this existing debt, these savings can go toward other uses authorized by state law," said City Administrator, John Mulder.
Current state law only allows the use of sales tax for the following purposes:
1. Extending sewer interceptor line
2. Construction of a booster pump station, reservoirs, and related improvements to the water system.
3. Construction of a building containing a police and fire station and an administrative services facility.
Voters will be asked on this year's ballot in the general election:
"Shall the present use of the City sales tax be expanded, without increasing the current tax rate, to include the construction and equipping of a regional, multiuse wellness center?"