Wayne County commissioners approve school refinancing package
By Steve Herring
Published in News on March 10, 2016 1:46 PM
Wayne County commissioners during a brief Monday afternoon special session approved a school refinancing package that will save the county $2.5 million over the next 19 years.
The refinancing would not reduce the term of the loan, but would save the county $2,945,896 after deducting some $240,000 in fees.
The county initially entered into a 20-year $41.5 million loan with SunTrust Bank on July 14, 2014, at an interest rate of 3.55 percent.
The county used the loan to fund construction of new middle schools in the Grantham and Spring Creek communities.
Davenport and Co., the county's financial consultants had the county look at using general obligation bonds because of a historic low interest rate of 2.739 percent.
But earlier this month, County Manager George Wood suggested that the county also see if SunTrust would be willing to meet the lower interest rate.
Wood told commissioners on Tuesday that he, Assistant Manager Tommy Burns and Finance Director Allison Speight has held teleconference with Davenport that had conducted the negotiations with SunTrust.
"We are recommending that you accept the (bank's) offer of a modification to the existing agreement from SunTrust that reduces the rate from 3.55 percent to 2.75 percent," Wood said. "This will generate net savings, after expenses, of $2,498,511. We can close on this change on March 19."
Wood said there were two other options.
One would allow the county the option to refinance after 10 years. However, he said he does not foresee the current historically low rates being around in 10 years.
"That is not a safe bet, in my opinion," he said.
The other option would require full refinancing and would take about 70 days, Wood said.
"During that time interest rates could change, and that might take away some or all of the potential savings," he said. "So there is serious risk, too.
"The selected option is a sure thing with a guarantee of the rate by SunTrust until we close on March 19."
Commissioner John Bell's motion to make the change was unanimously approved.