County Utility Bonds to be Refinanced

Ed Stull, the managing director of First Southwest Company, presented an update on utility system refunding bond pricing to county commissioners on Wednesday.

"I have good news and bad news,” Stull told commissioners. “But I think the good news will overshadow it."

The bad news first. “Since we spoke two weeks ago, the market has gone back a little bit. Yields are higher,” Stull said.

The good news second. The county can still save money.

In August Stull suggested the county consider refinancing two utility revenue bonds, paying off the old bonds with a less-expensive issue. Stull compared it to a homeowner refinancing a mortgage to get a lower interest rate. “We’re looking at considerable savings,” he said.

On Wednesday Stull said the county could refinance with a taxable bank loan or a bond issue. He advised the county could save considerably more with the loan.

“We are recommending that the county move forward with a taxable bank loan,” he said. “[The provider] to be determined by a [request for proposal] selection committee. It would outperform a bond issue.

“We were able to identify roughly what the market was,” he added. “In terms of the numbers, we took a conservative approach. A taxable bank loan [would] provide over a million in presence value savings. Bond issues a little more than $700,000.”

The county commission voted unanimously to approve the county moving forward with a taxable bank loan.

Commissioner Christine Robinson said it is important to note that the county is not incurring any new debt. “This is not taking out any additional debt,” she said. “It’s a refinance to basically lower what we are paying.”