Hawkins Approves Debt Refinancing Expected To Save $ 3.4 Million Over Next 15 Years | Local News
ROGERSVILLE – A resolution that will refinance $ 18.6 million in Hawkins County schools, courthouse and jail debt at about half the interest rate was approved by a committee vote Monday night County 18-2.
It was the second month in a row that the county has been asked to refinance its debt. Last month it was a $ 15 million loan that matured in late March and needed to be refinanced or repaid. This resolution was taken off the February 22 agenda and then approved at a special meeting called on March 8.
County bond adviser Scott Gibson of Cumberland Securities told the commission on Monday that the first bond issue was issued with an interest rate of just under 1.4%.
Gibson noted, however, that there has been a slight upward trend in interest rates since January, and recommended that the committee not hesitate to approve the refinancing of two additional loans at Monday’s meeting.
On Monday, the commission was asked to refinance a total of $ 18.6 million in debt through two separate loans, one of which was from a school construction and renovation project, and the other a built the Hawkins County Justice Center and Jail and renovated courthouse.
Although he expects new refinancing bond issuance to reach 1.78%, Gibson told the commission they may be able to lock in a new interest rate below 1.5%.
Either way, this will be a big improvement over the current 3.4% interest rate on these two loans.
Based on the projected rate of 1.78%, the county is expected to save $ 1.4 million on one loan refinanced in Monday’s resolution, and an additional $ 2 million on the other loan as the new bonds roll out. reimbursed in 2036.
At first glance, it might seem like a no-brainer, but the $ 11.1 million federal stimulus check the county is expected to receive has some commissioners talking about outright debt relief.
Commissioner Danny Alvis has said he would like to pay off the county’s debt, “and the sooner the better when we have access to our (stimulus) funding.”
Gibson noted, however, that federal stimulus funding may have restrictions on how it can be spent.
“I’m not sure paying down the debt is one of the permitted uses of the funds,” Gibson said. “I think you could potentially avoid issuing new debt to fund certain projects that would be allowed to use the funds.”
Gibson pointed out that the two high school HVAC projects and county-wide emergency radio systems are two impending big items that will likely be approved for stimulus spending.
By not issuing new debt to pay for these projects, Gibson said the county’s debt level will decline each year. One of the reasons the new interest rates are lower is that the county pays off the principle more quickly.
Gibson added, “In a few years you should be in pretty good shape. You’re pretty good now. Taking into account all the assets that you have financed over the past two decades, between two major school improvement and renovation programs, the construction of the prison and the justice center and the renovation of this courthouse , you have checked several boxes. You issued debt to do it, but that debt kept going down, it will keep going down, so you’re in really good shape today.
Commissioner Mike Herrell noted that the school system was getting more than $ 16 million from its own federal stimulus funding and, as of Monday, the high school’s HVAC project would be among the permitted uses.
Commission Chairman Rick Brewer asked if it was later determined that the stimulus funding could be used to pay down debt, and they are refinancing those two bonds, are there any other debts they could apply this stimulus funding without incurring a penalty.
A bond issued in 2016 becomes prepayable from 2023. Under federal guidelines, the county has until 2024 to spend stimulus funds so that it can later use stimulus measures to pay off that debt. ‘he wishes.