2017-08-31 / Front Page

Council approves refinancing of existing USDA water bonds

At a called meeting of the Lin­colnton City Council, a quorum of members – made up of Councilmen Alana Burke, Larry Goolsby, Kyle Reese, and Mayor Henry Brown – voted to proceed with refinancing existing USDA bonds attached to the water treatment plant through Stifel Investment Services. Council discussed the possibility of refinanc­ing earlier this month, regarding bonds from 1999 and 2005.

Locking in a 3.2 percent interest rate, about $670,000 has been pro­jected in savings over time. This is a slight increase from the original projection calculated by Stifel, as the originally presented interest rate decreased from 3.25 percent.

“You’ve already decided to begin this process, and this is just part two, to begin to sign tonight what would be the bond ordinance and the bond purchase agreement,” City Attorney Berry Fleming said. “If y’all re­member, we did this with the USDA project we have going on right now, so all I and the bond council did was readjust that to account now for the refinancing that will save us a lot more money going forward.

“When we vote tonight to to do these two things, we’ll have three series of bonds. The A bonds will be the refinancing of our previous debt, the B and C, when they’re issued, will be the new record with the USDA,” Fleming said, noting that the bond hearing and other legal procedures have already been taken care of.

The 20-year refinancing plan was estimated by .Trey.Monroe,.manag­ing

. director of Stifel Investment Services, to eliminate two-and-a-half to three years of debt repayment, and previously reported that his company did have “actual commitments from buyers” if the city moved forward with the plan to refinance.

Monroe also estimated that with the .’.99 .and .’.05 .USDA. .bonds .bun­dled together, that the average rate on that debt is about 4.4 percent, which will now be coupled with the 3.2 percent interest rate.

“The real benefit to the city here is in the ability to get the existing debt paid off faster, and that’s when you realize the savings over time on the debt service obligation. Your payments aren’t necessarily going to change a lot in the immediate term, so it’s going to be about the same that you’re paying now, certainly no more, maybe a few thousand dol­lars less per year than you’re paying now,” Monroe said. “Think of it as your home mortgage going from a 30-year mortgage to a 15- year mortgage, where you just get the stuff paid off a lot faster, and it’s of no more cost to the city than you’re already paying – that’s the concept that we have.”

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