Northampton approves bond refunding to reduce debt
JACKSON – After giving preliminary approval at their previous meeting this month, the Northampton Commissioners passed two bond orders at their regular meeting here on Sept. 20.
Earlier this year, the commissioners hired the firm Davenport & Company for financial consulting. The firm recently proposed refinancing existing debt through bond refunds to take advantage of current lower interest rates.
“We’re looking at a number of loans – these are bonds or loans the county has taken out over the years for various purposes,” explained Ted Cole, Senior Vice President of Davenport, during his presentation to the commissioners earlier this month.
Five of Northampton County’s general obligation bonds – ranging from being issued between 2003 through 2014 – will be refinanced as well as one bond for the Garysburg Water and Sewer District, which is also controlled by the Northampton County Board of Commissioners.
Four out of five county bonds were for water expansion. Those include a 2003 bond with $2,154,000 left to pay off; a 2005 bond with $570,000 remaining; a 2013 bond with a balance of $1,907,000; and a 2014 bond with $4,512,000 left. The fifth bond was for public schools. It was issued in 2013 and has an outstanding balance of $2,437,000.
The purpose of the Garysburg bond was for sanitary sewer. It was issued in 2000 and there is only $331,500 remaining to be paid.
Of the bids received, Cole recommended a proposal from Southern Bank for the Garysburg bond and a proposal from Key Bank for all five of the county’s bonds. The refinancing will lower the interest rate, which was as high as five percent for the Garysburg bond and over four percent for most of the county bonds.
With the new proposal, the lowered rates will be between 2.3 and 1.82 percent.
“We’re not extending the debt,” Cole emphasized, noting that some will even be paid off more quickly than originally scheduled.
During the Sept. 20 meeting, Cole explained that the original proposal from Key Bank was for a 15-year fixed rate instead of an expected 20-year rate. In a revised proposal, the bank agreed to an 18 and a half-year fixed rate, but added a no prepayments for 10 years provision.
The revised proposal will save the county over $3.97 million in total, which is about $112,000 more in savings than the original proposal.
Cole explained that, with final approval from the commissioners at their upcoming meeting, the next step will be to obtain approval from the Local Government Commission at their October meeting and then close on the refinancing with the bank by November 5.
Board Chair Charles Tyner, who is also currently serving as the Interim County Manager, said he did not really like the 10-year no prepayment provision. But Commissioner Geneva Faulkner spoke in favor of the revised proposal, pointing out that a fixed rate would be better than dealing with a variable rate, and the county would be saving more money.
After a unanimous vote to approve a revised resolution, the Board then easily approved both bond orders, one for the county bonds and another for the Garysburg Water & Sewer District bond.
“What we’ve done tonight is save this county many dollars,” said Tyner at the Sept. 8 meeting. “We are moving in the right direction with our funding.”