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Massena supervisor: hospital ‘hesitant’ to refinance bonds

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MASSENA – The Massena Town Council would like to move ahead on refinancing outstanding bonds held by the town and Massena Memorial Hospital, despite reports that MMH officials would like to wait until the summer of next year to refinance.

Refinancing now could significantly lower the interest rates on the bonds, saving the hospital a projected $780,000 and the town a projected $169,000 over time, Supervisor Joseph D. Gray said.

However, MMH officials would prefer to wait until mid-2013 in order to avoid the fees associated with refinancing the bonds before they mature, according to Mr. Gray. Town officials have said fees for refinancing the bonds will be in the $80,000 range.

Mr. Gray believes refinancing now would be in the best interest of both MMH and the town. He said the town’s fiscal advisors took those fees into account when calculating the savings, and noted that interest rates might rise by the time the bonds mature.

“The hospital at this point seems hesitant to pay the (refinancing fees) because they’re willing to gamble that interest rates will not rise by the middle of 2013,” Mr. Gray said.

The refinancing could lower the interest rates on the bonds from 4.125 to 2 percent, according to Bookkeeper Nancy A. Fregoe. The $11 million bonds were taken out in 2003, $8.9 million of which went to finance MMH’s capital improvement project and the rest went to improvements to the Massena Town Hall and Massena International Airport, Ms. Fregoe said.

Council members, in favor of more immediate refinancing, asked whether it was possible for the town and MMH to refinance their bonds separately.

Ms. Fregoe said refinancing separately might incur two separate sets of refinancing fees, and could possibly create complications in when the town and MMH make their bond payments.

Council members are considering bonding for a multi-phase capital project to address infrastructure concerns. The front facade of the Massena Town Hall and the front steps are deteriorating and need repair. The town barn is also in bad shape and needs upgrades to remain functional, officials previously said.

In total, the council may bond for either $1.5 million or $2 million over a 15-year or 20-year period to address all those concerns, which may also include new security measures at town buildings.

The council is also considering repairs to the parking lot next to the town hall. Mr. Gray has said in the past there is uncertainty as to whether the town owns that parking lot.

“If we were able to save on refinancing costs we could pay for some bonds” to fund those projects, Councilman John F. Macaulay said. “They’re important projects. We need to do them.”

Mr. Gray said the town is seeking alternative funding for those projects, but believes the town should set up bonds to fund the projects regardless of whether the alternative funding comes through.

“My thought was if the alternative funding comes through, great, then we’ll need to bond less or maybe not at all,” Mr. Gray said. “But if the alternative funding doesn’t come through, then shouldn’t we have something in place to (fund the projects)?”

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