DIXON – The city will save nearly $4 million under an agreement with Midland States Bank, which has agreed to allow an early payoff of three bonds, Finance Director Paula Meyer said Wednesday.
The bonds were issued in 2008, 2010 and 2011 and, under the bond arrangements, couldn’t be paid off any sooner than 2018, 2020 and 2021, respectively, Meyer said. But after Meyer and Commissioner Dave Blackburn met a few weeks ago with bank officials, the bank agreed to let the city pay off the bonds now, saving about $3.87 million in interest.
The bank had no obligation to allow the early payment, Meyer said, but the city approached the bank because officials believed taxpayers deserved to have the city try.
The city will pay off the bonds with funds received in a lawsuit settlement in the matter of former Comptroller Rita Crundwell, Meyer said. Crundwell is serving a term of nearly 20 years in federal prison for stealing more than $53 million from the city over two decades.
The balance on the bonds at the end of October was $12,316,000, Meyer said, adding that the total repayment would have been $16,184,610.
Meyer and Blackburn didn’t expect the bank to agree to an early payoff, but were hoping for a chance to negotiate, Meyer said.
Paying off that external debt was a “must,” Meyer had said when talking about use of $40 million the city will receive from the settlement. On Monday, the Dixon City Council approved the allocation of $8,678,083 – of the $14 million the city has received so far – to pay interfund loans, which is money it had borrowed from its own operating funds.
The city should receive the remainder of the $40 million by Thanksgiving and have proceeds from the sale of Crundwell’s property by the end of the year, Meyer said Monday.
If Midland hadn’t agreed to the early payoff, Meyer said, she had another plan to save the city some money.
Meyer had planned to put about $14.5 million from the settlement in U.S. Treasury bonds, an investment she expected would have yielded more than $1.6 million.
The agreement with Midland States Bank will allow the city to save more than twice what Meyer had hoped to realize from the investment.