County weighing refinance for loans
By Steve Herring
Published in News on March 30, 2012 1:46 PM
Wayne County could realize upward of $300,000 in savings -- about half a penny on the property tax rate -- by refinancing up to $9.62 million in loans for work done several years ago on the county-owned Borden building and on the county's new radio system.
Wayne County Finance Director Pam Holt compared the proposal to refinancing a home mortgage.
But first the county will have to seek financing proposals from lending institutions -- a proposal that will be before Wayne County commissioners when they meet Tuesday morning. An agenda briefing will be held at 8 a.m., followed by the regular board session at 9 a.m. in the commissioners' meeting room on the fourth floor of the county courthouse annex.
Commissioners will be asked to set a public hearing on the issue for their April 17 meeting.
The remaining balance on the Borden building is about $1.4 million of the original $3.7 million loan that has an interest rate of 4.33 percent.
The original loan for the radio system was $9.7 million, of which $7.9 million remains at an interest rate of 3.38 percent.
"In our case it could save us a couple hundred thousand dollars," County Manager Lee Smith said. "Even if we can't (refinance), it behooves us to look at it. The rates are lower. All this really does is allow us to get out there and begin the process. You could get out there and you are not going to save any money or it won't work -- it is not enough to constitute going through the trouble, but it might."
Davenport and Associates, the county's financial consultants, suggested the county consider such a move. The city of Goldsboro recently refinanced some of its debt and was able to save money, Smith said.
"It is a smart thing to do it if you can," he said.
However, the county won't know what rates might be available until it puts the projects out for proposal, Mrs. Holt said.
Smith compared the plan to a homeowner going to a lender website where several banks might look at a person's home. There might be four or five banks interested and the homeowner would decide which one was offering the best rate, he said.
"How much do we hope to save?" Smith said. "We won't know that until we put it out because it is all based on the interest rate that we get. But we are hoping to save between $200,000 and $300,000 in total over the life of the loan. It is worth our time to try."
The county does not know what rates might be because they change daily, Mrs. Holt said.
The county will ask for the proposal in two different ways -- one in which the loans will be packaged together and another in which they will be separate.
Smith said he hopes to have the proposals back before the end of the fiscal year June 30 and to be closed out before that date.
"We do not have to go through all the steps the county was required to do when it first borrowed the money," he said.
Also on the agenda Tuesday:
*Commissioners will be asked to consider a mental health resolution for substantial equivalency and a plan of merger and agreement for Eastpointe. Eastpointe Area Director Ken Jones will present the resolution and plan of merger and agreement with The Beacon Center and Southeastern Regional Mental Health, Developmental Disabilities and Substance Abuse Services. The resolution will support Eastpointe's petition to the state to have the agency's personnel system designated as being equivalent to the state's.
*The North Carolina Children's Theatre will give a presentation on its "DUI-DOA" tour.
*The board will be asked to appoint Marvin Duane Bunn to the Little River Fire District Commission.
*At 11 a.m., commissioners will meet as the Board of Equalization and Review.