Bond refinancing will save taxpayer money

For several months now you’ve heard me talking about the refinancing of our county bonds. I’d like to give you a final report on that transaction now that it’s closed.

The total savings over the 12- year life of the bonds will be $763,835, substantially more than first anticipated as interest rates have continued to drop.

On Oct. 18, SAMCO Capital Markets, Inc. completed the refinancing of the Milam County 2004 General Obligation Bonds for a total cost of $6.37 million: $6.3 million being required to retire the 2004 issue (including $21,500 costs of negative arbitrage), some $25,000 used for attorney fees to Fullbright and Jaworski LLP for bond counsel services (including filing fee for the Texas Attorney General’s office), $37,000 to SAMCO for costs of issuance, $3,500 to Andrew Kurth LLC for bank counsel, $2,500 to Barthe & Wahrman as verification agent, and the rest for miscellaneous other costs involved (all numbers rounded).

As it turns out, Regions Bank who was the successful bidder did not require bond insurance as I had originally reported in my September article, resulting in significant savings in refinancing costs to Milam County.

I had reported to you that this might cost us as much as $80,000.

The new 2012 Series Refunding Bonds that have been issued run through 2024 and have an interest rate of 1.944% vs. 4.08+% on the old bonds that were retired.

The 2013 debt service payment will be $606,296 vs. $671,365 under the old schedule, over $65,000 less!

We have actually budgeted to pay $621,365 into the bond account in 2013, so we will deposit about $15,000 more into that account at the bank than will be needed to make our payments next year, a fund that already contains a balance of about $150,000. Our new 2014 bond payment will total $612,588. However, we will also be able to use some of the excess balance that is in the account and budget even less, thus helping us out even more in our 2014 budget planning.

As I’ve stated, the total savings over the 12 year life of the bonds will be $763,835, so the result of this bond refinancing transaction will continue to provide a nice bonus for us for years to come, reducing our bond payment by over $60,000 each year through 2024.

Now we must continue on with the other tasks mentioned in the September article of building up our financial reserves, converting back to accrual accounting, and the important goal of economic development and job growth for Milam County.

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2012-11-08 digital edition

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