Refinancing of bonds sold for the construction of the Lawrence County Justice Center will save nearly $180,000.
Lawrence County commissioners voted on March 3 to authorize the sale of $4,945,000 in lease refunding certificates. The new certificates, carrying an average interest rate of about 2.284 percent, replaced certificates originally sold in 2007 at an average interest rate of about 3.733 percent.
According to a statement released by the commissioners, the transaction resulted in savings of about $179,494 in interest payments over the life of the original bonds. The sale positioned the county to make the arbitrage rebate payment for the Series 2007 Certificates of $147,899 and still reduce future interest expense by $31,595.
"We chose the plan with slightly accelerated payments and to retain our funds in reserve in case sales tax revenues decline any further in the future," said Presiding Commissioner Sam Goodman.
Additional savings are possible, said Western Commissioner Rodney Barnes. The new bonds were sold with a call feature so they can be repurchased on April 1, 2013, at no penalty.
"If interest rates are lower in 2013 or later," Barnes said, "we can take advantage of that. Meanwhile we are locking in these levels that are almost 1.5 percent lower than they were in 2007."
"It is nice to be able to save $179,494 of interest expense that can be used to pay off the certificates prior to their scheduled maturities," said Joe Ruscha, eastern district commissioner.
L.J. Hart and Company, of St. Louis, prepared the refunding proposal. Two significant factors made the Series 2010 refunding possible: lower interest rates than in 2007 and the fact that the Series 2007 Certificates are subject to prepayment on April 1 at no penalty.
According to Gina C. Sharamitaro, assistant vice president with L. J. Hart and Company, the certificates have been made available to local institutional investors.
"We currently have $965,000 maturing on April 1, 2015 with an interest rate of 2.7 percent available for purchase," said Sharamitaro. "These certificates are being sold on a first-come, first-served basis."
Closing for the refunding issue is to occur on March 11. For more information about the Series 2010 Refunding Certificates, call L.J. Hart and Company at 800-264-4477. A prospectus is available upon request.