Rehoboth Beach debt refinancing saves more than $1.8 million

The City of Rehoboth Beach closed last week on an agreement with JP Morgan Chase Bank, NA to issue nearly $17.2 million in general obligation bonds at a rate of 1.61% for a 15-year period. This effort to refinance a portion of the city’s debt will save taxpayers approximately $1.85 million in loan repayments and result in a 4-year reduction on the payoff of a previous loan.

Income from the issuance of these general obligation funds will be used to pay off two pre-existing loans, one from the Drinking Water State Revolving Fund, with an interest rate of 2.76%, for construction of the Lynch well, and the other a U.S. Department of Agriculture loan, with an interest rate of 2.375%, for construction of City Hall.

“This wasn’t a difficult decision,” says Finance Director Burt Dukes. “We’re able to pay off one of the city’s loans four years earlier at a substantially reduced rate, and we’re saving taxpayers money, somewhere in the neighborhood of $1.8 million.”

The city worked with its financial advisor Wye River Group of Annapolis to execute the financial agreement. In December, the city received five bids in response to its request for proposals. The city selected JP Morgan Chase Bank, which offered $17,168,332 in general obligation bonds with terms of a 1.61% rate over a 15-year period.

Late last year, the City of Rehoboth Beach received the Distinguished Budget Presentation Award for the first time from the Government Finance Officers Association (GFOA). To earn GFOA recognition, budget documents must meet program criteria and serve effectively as a policy document, financial plan, operations guide, and communications device.