Finance director wants Champaign to buy its own bonds
By Mike Monson
Tuesday October 7, 2008
CHAMPAIGN – The national credit crunch is starting to squeeze the city.
The interest rate on $1.75 million in variable-interest-rate bonds the city sold in 2004, to help redevelop the old Burnham Hospital site, has jumped from below 4 percent to as high as 9.4 percent.
At the 9.4 percent rate, the city would have to pay an additional $8,000 per month in interest costs. That fact has city Finance Director Richard Schnuer recommending to city council members that they use $1.75 million in city cash reserves to buy their own bonds – which are variable interest, have an indefinite term, are taxable and, as short-term debt, are bought and sold frequently.
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