Ice arena debt will be paid off early
by Joni Astrup
The city of Elk River will pay off the ice arena debt early.
The city had issued $2.1 million in general obligation ice arena bonds in 1996 to build an Olympic ice rink, which was attached to the existing arena at 1000 School St. The old part of the arena dates to 1971.
The bonds carry an interest rate of 5.7 percent and have a final maturity of Dec. 1, 2013.
The Elk River City Council has agreed to call the bonds and pay them off early — on Dec. 1, 2011.
The amount needed to prepay/call in the bonds is $370,000. The money will come from a capital project fund, the Great River Energy (GRE) Reserve Fund. GRE is paying the city $375,000 a year for five years as an in lieu of property tax payment for the peaking plant located along Highway 169 at GRE’s Elk River campus.
“Given the current rate on the bonds (5.7 percent) and the amount of internal rate of return on city investments this makes a lot of sense,” said Elk River Finance Director Tim Simon.
Paying off the bonds early will save the city $31,920 in interest expense over the next two years. In addition, the 2012 general fund will see a savings of $111,650 in 2012, according to Simon.