The Duncan Banner

October 11, 2012

Refinancing debt to save Duncan $1.3 million

Joshua Kellogg
The Duncan Banner

DUNCAN — The members of the Duncan City Council and Public Utilities Authority reconvened Wednesday evening for a special meeting to discuss and approve action to refinance a bond and note which will allow an approximate $1.3 million in savings for the City of Duncan.

The intent is to consolidate existing debt, shorten time to maturity, reduce total payoff of debt and lower interest rate from two outstanding debts from previous city work.

The resolution would authorize the Public Utilities Authority to issue its utility system revenue note, to not exceed $7.4 million.

Representatives from The Public Finance Law Group PLLC were on hand to ensure any questions were answered in relation to the paperwork.

“Things have come together in a way that what was a good deal a year ago, is a really good transaction today,” attorney Allen Brooks said.

The purpose of the resolution is to refinance the Series 2002B Bonds from the sewer plant work in 2002 and the Series 2009B Note from the 2009 HoneyWell project, for the work the  company did to install automated meter reading systems, and to replace meters, lighting and billing software.

The principal balance outstanding for the sewer plant bonds, as of Oct. 1, was $3.58 million with the HoneyWell Project note balance at $3.99 million for a total of $7.57 million.

The new principal amount will be $7.39 million but with a fixed interest rate of 2.35 percent, the estimated gross debt service savings will be $1,287,266.48, after application of existing fund balances and payment of all costs of issuance.

The note for the HoneyWell Project had an interest rate of 5.15 percent with the sewer plant bonds having an 5.04 percent interest rate.

Handling the purchase of the note will be First United Bank and Trust Company out of Durant.

Attorney Nathan Ellis of The Public Finance Law Group said during the special meeting that three local banks were sought to handle the purchasing of the note but given the offer from First United Bank and Trust Company, chose to not pursue the transaction.

A resolution from the City Council was required to be approved, allowing the Public Utilities Authority to take the action of authorizing the utility system revenue note.

In approving both resolutions, the City Council members approved the first resolution then adjoined the special City Council meeting before reconvening in the special Public Utilities Authority meeting and approving the resolution to issue the note.