In a fiscal year filled with dark clouds, the village of Hinsdale is preparing to obtain $650,000 worth of silver lining.

During a Monday, July 6, meeting of the Administrative and Community Affairs Committee, members unanimously approved a plan for the village to refinance existing bonds to free up $650,000.

If the Village Board approves the deal at its Tuesday, July 14, meeting, the village would make the refinancing transaction Sept. 1.

The plan already has the endorsement of the village’s Finance Committee.

“We would like to take advantage of a lower interest rate environment,” said Village Trustee Doug Geoga, chairman of the ACA Committee.

According to Darrell Langlois, village finance director, interest rates could range from 1 percent to 4.5 percent. The village’s current interest rate on the 2002 bonds being refinanced range from 4 percent to 4.95 percent.

“This would add $650,000 cash to fund future capital projects,” Langlois said.

By adding six years to the village’s current repayment schedule — the village’s debt limit will remain at about $171,000 a year — the village also will add $640,000 to its overall debt, Langlois said.

The existing bonds are scheduled to be paid off in 14 years, but refinancing would extend the schedule an additional six years, Langlois said.

The village also is preparing a five-year capital plan it expects to release this fall.

“The $650,000 expected to come from the refinancing is a small amount compared to the capital improvement needed within the village. Even though we will reissue the bonds without specifically earmarking how those funds will be used, there is no doubt we can wisely spend $650,000,” Geoga said.

To wait until the capital plan is completed would leave the village vulnerable to a spike in interest rtes, he said.

“It is right to do this now,” Geoga said.

The Finance and ACA committees are advisory boards. The Village Board has final voting authority on the matter.

Earlier this year, the village adopted a balanced budget that included several cuts to personnel and programs to cover a loss of more than $1 million in revenue.

Kevin Kane, chairman of the Finance Committee, attended the ACA Committee meeting and reported the 2010-11 budget forecast is not positive.

“Based on conservative estimates, not worst case scenarios, we are looking at a very difficult budget cycle next year,” he said.

Kane said the current economic downturn may take three years from which to recover.

“This looks similar to the 1991 and 1992 recession, in which it took some revenue streams three years to recover,” Kane said.

Rising expenditures, such as pension costs, “don’t look pretty,” Kane said.

“The village may be facing some very difficult choices again,” Kane said.

If expenses continue to exceed revenues in the future, some of the options facing the village could be reductions in services, spending down cash surpluses, deferring maintenance projects and under-funding pensions, Kane said.

Positive factors could include an increase in state income tax, significant permit fees for construction of a new wing at Adventist Hinsdale Hospital and an increase in revenues due to an economic turnaround.