Refinancing of county bonds progresses
Staff reporter
Marion County Commission in regular session Monday made decisions relevant to the refinancing of two bonds.
David Arteberry, bond underwriter for George K. Baum and Co., presented information and a schedule to the commission and to County Treasurer Jeannine Bateman.
Arteberry presented three options to the commission for dispersing of the savings to the county.
The first option could be a lump payment in 2005 of the accrued savings of approximately $29,391.
One "draw back" with this option, Arteberry said, was planning for the full payment in 2006.
"This option can be confusing because the payment is almost $30,000 less one year and then (the county) has to make the full payment the next year," said Arteberry. This arrangement has been known to cause hardships for entities.
In the second option, the savings payments could be spread out over the life of the bonds. The payments would be approximately $8,000 to $10,000 per year.
The third option could be the lump sum payment in the final year of the bonds, which would be 2007.
Arteberry further explained that the longer amount of time for the pay out, the more money the county could receive. He also told the commission that the rising interest rates may affect their decision.
The commission agreed that option three would not be the best option because "the sooner we receive it, the better off we'll be," added Bob Hein, commissioner.
The commission approved option two with the annual payments over the life of the bonds.
Arteberry also asked for some direction from the commission regarding the minimum threshold amount of savings for the bonds and the continuation of the refinancing.
"Some think that as long as the benefit (savings) and expenses are equal, then it's advisable to continue the refinancing process," said Arteberry.
In this case, the benefit (savings) and expenses amount would be $13,500 each. Currently, the savings is at $29,391.
Wetta asked the amount the county would owe George K. Baum and Co. should the county decide not to proceed with the issue. Arteberry said that the company only gets paid if the bond goes through.
The commission instructed Arteberry to contact the county clerk if the total savings amount should decrease to $20,000.
Arteberry reminded the commission that the new bonds are non-callable (not redeemable before the maturity date). He also confirmed that the bonds are not being extended, but rather being issued at a lower interest rate than the original bonds. The new bonds would have the same maturity date as the current bonds, 2006 and 2007 respectively.
Resolution 03-26 was approved which redeems the old bonds, sells the new bonds, and authorizes Carol Maggard, county clerk, to approve the official document.
The state has been notified of the intention of the county to redeem the 1997 and 2000 series and reissue the new bonds. Arteberry will have the final results of the bonds at the Dec. 1 commission meeting.
The old bonds will be redeemed on Dec. 15 and the new bonds will be marketed (sold) beginning Nov. 24.
Arteberry asked the commission to consider contacts for purchasers of the bonds. Bateman added that local banks will be contacted.
