“The first option is what I feel matches the request as close as possible,” Owens said.
• Public Offering, Lower Yearly Payments
This finance would maintain the existing debt structure, while lowering the payment in every year. The second option balances maximum savings with decreased payments.
RJ would evaluate having the refunding bonds insured through a municipal bond insurance company. This could enhance the county’s credit.
Owens said the county already has information required for public disclosure throughout the life of the bonds such as the 10 largest sewer and water customers.
• Public Offering, Take maximum advantage of low rates
The county’s current $5.2 million loan from the Georgia Environmental Finance Authority (GEFA) Drinking Water State Revolving Fund for multiple water infrastructure improvement projects is considered subordinate debt for public offering.
This final maximum cash scenario stretches the debt term to 30 years.
“We can take that debt and wrap it around the GEFA loan to create the absolute lowest payment each year. This should create somewhere on the order of $300,000 per year of free cash flow,” Owens said.
According to the proposal, this option offers the highest overall debt service coverage.
The extra cash might prepay the GEFA loan or go to other areas. Yearly savings could boost the general fund or accumulate into a renewal and extension fund for future water system improvements or repairs.
• Refinancing decision
Owens said the proposals interest rates should remain steady, but Finance Director Dawn Hudson said these numbers are never certain.
“The rates aren’t guaranteed,” she said. “We will work with (Raymond James) to present more financial information that may change the rates proposed to the good or bad side.”
More service fees are built into the public offering because agents must push the bonds to investors. Private placement gets in the market faster.