Each year many homeowners look into refinancing their homes or their cars, in hopes of getting a better rate and saving money on interest.
William Woods University recently did much the same thing, and will save $1.48 million in interest as a result.
The university issued $8 million worth of bonds in 1999 to make improvements to Tucker Dining Hall and several residence halls, build the Center for Human Performance, add a chemistry lab, and complete various other renovations on its Fulton Campus.
The $6.95 million in bonds still outstanding will be refinanced, allowing the university to realize the interest savings.
William Woods is committed to operating in the black. According to Cale Fessler, chief financial officer, “Our positive financial performance, particularly over the past six years, was a major contributing factor in the university’s ability to secure better rates.”
The involvement of the Callaway County Industrial Development Authority (IDA) has also helped the university secure favorable rates. The IDA will be the issuer for the bonds, which Fessler said will benefit the community and make the bonds “bank qualified,” meaning that local and surrounding banks can buy them. The “bank qualified” status provides the university with additional interest savings.
The seven members of the IDA, all business leaders, are appointed by the Callaway County Commission as a public corporation authorized and empowered to issue revenue bonds to make construction loans or refinance outstanding obligations.
The IDA serves as an intermediary between the borrower and the lender, resulting in better rates for the borrower. The fees paid by the borrower for this service are shared by the Kingdom of Callaway Chamber of Commerce and the Fulton Area Development Corporation.
Mike Boulware, Callaway Bank vice president, is a member of IDA.
“The IDA is a good financial tool that benefits our community two ways.” he said. “First, it is good for the company that issues the bonds and uses the money for investment here. Second, it is good for the community because the fees collected go to develop more business through Chamber and FADC programs.”
Refinancing eliminates the final four years of payments for William Woods, so the bonds will fully mature in 2025 instead of 2029.
“It’s like refinancing a house and saving money,” Fessler said. “In this case it is a considerable amount of interest.”
He explained that the bond refinancing is part of the whole fiscal management of the university.
“We try to make decisions in the best fiscal interest of the school,” he said. “Where we’ll save is the interest cost, which will contribute to the overall fiscal health of the university. This happens over time, but it helps us as we move forward.”