Sometimes it makes more financial sense to borrow money than reduce debt.
Now might be one of those times, Hamburg’s financial consultant told Village Board members this week.
Interest rates are extremely low, and the village’s bond rating of AA- is attractive, said Jeffrey R. Smith of Municipal Solutions.
“The market right now wants security,” he said, adding that the village would be a secure investment and very attractive for those purchasing bonds.
Smith said municipalities with similar bond ratings are getting interest rates of 0.45 percent on bond-anticipation notes.
“Rates have been low for a while,” Village Administrator Donald P. Witkowski said. “We just want to make sure we don’t miss an opportunity.”
The village has $2.7 million in debt, which is about 7.5 percent of its constitutional debt limit, so there is room to increase its debt.
“The question is, what kind of debt do we want to take on?” Witkowski said.
Smith recommended that the village look at what capital projects, such as roads, water lines and equipment, might be on the horizon.
“I don’t see immense pressure where we’re going to lose a market overnight,” Smith said, but he did recommend coming up with a long-range plan.
He said low interest rates might last as long as five years.
Witkowski cautioned board members that “almost any capital project we do would cause us to go over the tax cap.” The village can surpass the tax cap with a vote by the Village Board.