Refunding effort shows county is being thrifty
The Haywood County Board of Commissioners are moving forward on a plan that could potentially save local taxpayers thousands of dollars a year on interest payments.
With federal actions that have steadily reduced interest rates, County Finance Officer Julie Davis advised the commissioners last month it might be time to re-examine all the county’s debt obligations to see if a cost savings could be realized.
The board agreed and a consultant was retained to help assess the amount of savings that would be possible and navigate the financial sea of paperwork required for the refunding process.
This week, the board got its first glimpse of the possible savings, though bank bids will determine whether the process moves forward.
A resolution approved by the board authorizes the issuance of a general obligation bond not to exceed $7.25 million to refinance the $12 million general obligation bond approved by Haywood voters in 2004 to finance the construction of a new jail and headquarters for county law enforcement.
At the time the project was financed with bonds sold in $600,000 increments and the interest rate varied from 3.5 to 5 percent. Current rates are between 1.5 and 2.5 percent, and Davis is hoping bids will come in at the lower end.
If that happens, the county could save up to 8 percent on its debt service for that project alone. That would mean between $40,000 and $50,000 could be saved annually for the next 13 years of the payments — an amount that could reach $600,000.
Davis said unless at least 3 percent savings could be realized, the process wouldn’t be started.
Other county debt obligations are being looked at as well, but the 2004 bond offers the biggest potential bang for the buck and is where the process will start.
More recent loans secured by the county have been less than 2 percent, and debt incurred before 2004 has been paid down substantially, which reduces the benefit of refinancing.
Going through the refunding process is clearly an arduous task, but is one Davis and the commissioners are to be commended for investigating. In a $70 million annual budget, some of those in charge of taxpayer dollars elsewhere might scoff at savings of less than $50,000, something we’re glad is not the case in Haywood.