Due to a calculating error by their financial advisors, West Baraboo officials learned Thursday they will be paying about $400,0000 more over the lifetime of their most recent 10-year borrowing plan than originally projected.
During its regular December meeting, the West Baraboo Village Board looked back over last month's decision to sell $1.1 million in general obligation bonds to cover a variety of village projects, said Village Clerk Mary Klingenmeyer. The review was required after the board received a letter from its financial advisory firm, Ehelers of Brookfield.
Ehlers advisor James Mann said "operator error" resulted in a spreadsheet underestimating the total cost of the 10-year bond.
"When we re-looked at the numbers we discovered a cell was not across the line being added correctly," he said. "So it understated the impact."
In November, he estimated the new borrowing combined with the village's existing debt load would cost about $1.6 million by the time it is paid off in 2022. Instead, a corrected estimate of the total debt payment is just over $2 million by 2022, he said.
According to a Dec. 6 memo from Mann to the board, the village's "status quo" debt load would be paid off in 2020 at a total cost of about $1.6 million. The new borrowing includes refinancing of $435,000 of existing debt to reduce the interest rate.
The borrowing also includes $340,000 for the future extension of utilities past the Highway 12 Bypass, $215,000 for projects in the villages' tax increment district and $175,000 for projects related to the sewer and water utilities.
West Baraboo's bonds will be sold competitively in January, Mann stated in an email. He speculated the interest rate would be between 3 and 3.5 percent.
Mann's memo shows the new borrowing has a small impact on taxes in any given year, with the top tax rate for debt service rising to $2.32 per $1,000 of property value when the first payment on the new bonds is made in 2013. By comparison, if there were no new borrowing, the debt service tax rate in 2013 would be $2.24 per $1,000.
The tax rate cost falls gradually from there, with the final bond payment of $107,000 being made in 2022 at a tax rate cost of $1.01 per $1,000, according to Mann's memo.
Mann offered the option of spreading the cost of the borrowing over a 15-year period to further reduce its annual cost, but noted that would add another $54,000 to the total debt payment.
Village officials rejected that option and stayed with the quicker 10-year payoff, Klingenmeyer said.
Trustee Gale Getschman voted against the original borrowing plan in November because he preferred to reduce the annual cost with a 15-year repayment, he said Friday. However, by Thursday's meeting he had come to agree with the board's majority.
"I just thought it over, and thought we might was well get it paid off," he said.
In other business, board members:
• Agreed to have Alliant Energy install a street light on the cul de sac of W. Oak Street.
• Will seek proposals from firms to do building inspection under contract.
Send email to firstname.lastname@example.org