County commission saves $3 million on jail bond debtPublished 11:55am Friday, February 15, 2013
The Morgan County Commission will save nearly $3 by refinancing bond issues that were obtained in 2003 and 2004 to build the county jail.
Montgomery-based Merchant Capital LLC refinanced the 2004 bond series in two parts. The commission on Feb. 12 adopted resolutions authorizing the issuance of general obligation refunding warrants for Series 2 – 2013 A and 2013 B.
“The original rate was 5 percent and by refinancing it was lowered to 2.5 percent,” explained Commission Chairman Ray Long. “We didn’t extend the length of the bond issues; therefore, we will save all of the money that otherwise would’ve gone to interest. With refinancing of both bond series wil will save almost $3 million in taxpayer’s miney,”
The jail, which opened in 2006, cost more than $23 million.
Merchant Capital executive vice President Ken Funderburk commended Long for supporting the bond refinance project.
“There was a decision point last summer where the chairman was challenged to accept a savings that would have generated at that time or wait in hopes of a greater return and the chairman chose to wait and it tuned out to be an absolute stellar decision,” Funderburk said. “It’s not just an interest rate question of replacing a higher interest rate with a lower rate, but the cost of escrow is also involved, We informed the chairman that if he waited the escror would cost less and he did so. I don’t know of another instance around the state where we’ve had that positive of an outcome in that short period of time.
“We looked to save money in every possible way and this was good time for use to do so with the extremely low interest rate,” Long said. “We had an opportunity to refinance this series when we did the 2003 series, but we saved more by waiting until now.”