Central Coast Council has spent $24M paying out balloon payments on some of its loans.
Council approved the refinancing of borrowings of $24,618,322 from a financial institution with a repayment schedule over five years at an indicative interest rate of 1.50 per cent amortised over 10 years.
Administrator Rik Hart explained at the June 15 meeting that the $24M being refinanced was to meet balloon payments that have accrued over the past few years on three loans.
In essence, the council replaced a $24M loan at 8 per cent with a much lower interest rate.
“We are actually reducing our cost of interest,” Hart said.
He said more balloon payments are due in 2023 for the $100M loan the Council signed up for after interim Administrator Dick Persson took over in 2020.
At the time, Hart was the acting CEO.
Balloon payments occur when a loan is paid back interest only and the principal is paid as a lump sum as a balloon payment which can occur at some future date.