LAWTON, Okla._ The city here says it will save more than $8 million for making an early payoff on two loans totaling more than $30 million.
The city council voted unanimously Tuesday evening to pay the debts off 14 years ahead of schedule. Both loans were taken out from the Oklahoma Water Resources Board. The first loan, which was used to pay for the Southeast Water Treatment Plant had a remainder of $25 million to be paid. The second was a nearly $9 million loan used for wastewater treatment.
Councilman Doug Wells has been vocal about his support for paying these loans in the short-term for years. He says if the city's money were to sit in the bank for another decade or longer, the interest accrued would be less than the interest they're being charged on the loan.
"We've got low interest rates; so, we don't have enough money," says Wells. "We currently have about $40 million on hand out of that program, with no more money coming in (other) than interest and we owe $50 million, so we're $10 million short."
Instead of falling short and costing the city money it doesn't have, the council voted tonight to use money available to get rid of the debts.
"It's perfectly feasible; we have the money sitting in the bank," says Wells.
Paying these bills off now will save roughly $8 million dollars, which would have been the cost of interest for making incremental payments through 2028. This $30 million will be taken from the $40 million left in the 2005 capital improvement project fund, which collected money from a portion of the city's sales tax from 2005 though the end of 2011.
"The money has always gone the way the citizens voted it to go; it hasn't been used for any projects except what they've approved," says Wells.
These projects include the earlier mentioned water facility and also recent road construction like the pavement overlays on Cache Rd. and the ongoing work along Gore Blvd.
Councilman Wells added the Oklahoma Water Resources Board also relinquished a penalty for an early payment, which to him was another added incentive.