The County Board plans to refinance these outstanding bonds in order to get lower interest rates.

The McHenry County Finance Committee received a proposal to refinance outstanding debt this week.

BMO Harris representative Eric Anderson make the presentation. That bank will get the biggest payment for the deal.

Refinancing these debt certificates is a lot like refinancing a mortgage. If interest rates are lower, you can save money.

The County has $4.5 million it issued in 2006 that it can call (pay off) and refinance in January.

If they miss that date, they have to wait six more months.

Some of the borrowings mature each year from 2015 through 2022. They have an interest rate of 4%.

The County can probably refinance them all for under 2%, including professional costs. (The taxes are levied a year before debt service.)

Similarly, the County has $11.9 million in debt certificates issued in 2007 outstanding that mature 1/1/16 and 1/1/17.

They have an interest rate of 4.5%.

Because they are shorter maturities than the 2006 debt (2016 and 2017 instead of out to 2022) and interest rates are lower in the short run than in the long run, these can be refinanced at under 1%.

The refinancing does not extend the maturity of the borrowing, it just cuts the annual payment.

In aggregate, the County expects to save about $1 million.

This will not increase the ability of the County to levy taxes for operating purposes.

If debt service goes down, the debt service levy goes down.

Taxes go down.

But, most taxpayers won’t notice the difference.