Refund or Refinance
Jun 27, 2013 | 1691 views | 0 0 comments | 162 162 recommendations | email to a friend | print
Refund or Refinance

What would you do? The City council, acting as the Patterson Public Financing Authority, is deciding in the next two City Council Meetings to either Refund or Refinance approximately $76 Million dollars’ worth of loans, which directly affects over 50 percent of the taxpayers of Patterson. The plan is to issue up to a total of $88 million worth in bonds. We currently pay 6 percent interest on the $76 million bonds, and as most people know, interest rates are lower than that.

As a homeowner, I took advantage of this for my home and I hope that most of you did as well.

The Refinance: As homeowners, you could borrow the money from the bank and pay off these bonds on your property. For the average homeowner, this is about $20,000 today. Your house payment would decrease each month by the amount of interest you saved.

A one percent saving would be $200 per year, and for many of the homeowners a two percent savings would be $400 per year.

The City wants to take advantage of this as well, for the $76 million in bonds that the homeowners haven’t paid off, the city can reissue and save interest. A one percent saving is $760,000 per year and a one and a half percent savings of $1.1 million a year. The city has a 6 percent fee or $5 million for reissuing the bonds, so they cannot save as much money as a homeowner with excellent credit.

The Refund: As homeowners, when we refinance, we can choose to take out cash when we refinance to spend as we want to. So, as the City Staff and the City Council tell us, your payment doesn’t go up but they can get cash out of the refinance of $12 million. For the average homeowner, this is additional debt of $3,500. For some neighborhoods, this is less and some more.

The Proposal: The $12 million can be used for unnamed Capital projects. On the un-prioritized list that I know about are: new wells, renovating the downtown parks: $3 million, fixing the building the city just purchased: $2 million, other projects in the downtown that could be much more expensive but have not been fleshed out.

The City staff is currently proposing a blend of these two options. For Heartland Ranch, only the Refund option: the City keeps $500,000 for Capital Improvements. For the other newer subdivisions, a blend of the two options: $5 million in new debt and a $300,000 per year savings in reduced interest payments.

You need to contact your City Council Representatives and tell them what you want done. You need to attend the next two meetings. When I talked to many homeowners last fall, I heard them say I need my Mello Roos payments reduced. HERE IS YOUR OPPORTUNITY.

This is where your City Council really impacts you. With foresight and planning we can borrow money for much needed projects and grow our city efficiently. Without planning, this is where many cities in California and the country have gotten into financial problems.

YOU have a choice, you can go to the bank before the end of summer and reduce your payments, or the City will go to the bank with their plan for your money.

So I ask again,

What will you do?

Dennis McCord moved to Patterson in 1999 and became an active city council candidate in Patterson. He is employed at E & J Gallo winery for over 15 years.

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