County refinances to save $400,000
The Franklin County Commissioners took action Friday to refinance the county's 2002 General Obligation Bond, in a move officials said would save over $400,000 in interest and fees. Working with their advisor, Public Financial Management, Inc. (PFM), the commissioners solicited proposals from 13 banks to refinance the remaining bond principal of $7,540,000. Five banks submitted proposals. The best rate and overall proposal was from Bank of America at a fixed rate of 2.99 percent for the life of the note, maturing in May 2022, the same time as the original bond issue. The remaining maturities on the existing bond carry interest rates ranging from 3.3 percent to 4.55 percent.
The commissioners chose to refinance the bond through a tax-exempt bank note rather than through reissuing bonds based on PFMs review of the municipal financing marketplace. Lower costs of issuance of approximately $100,000, combined with more favorable interest rates than the municipal bond market, and the county's overall excellent credit rating, resulted in savings of $401,638. The savings amounts to 5.3 percent of the refunded principal, which far exceeds the standard threshold of 2 percent.
"We have been making a concerted effort to prudently manage the county's finances. Today's action is the direct result of that effort, and we will continue to explore ways to save the people's money," said David S. Keller, chairman of the Board of Commissioners.
In November, the commissioners successfully refinanced a $4,500,000 lease for emergency services radio equipment, saving over $350,600 in financing costs. They also borrowed $1,566,000 in Recovery Zone Economic Development Funds under a federally subsidized program. The Recovery Zone funds are being used for energy and efficiency upgrades to the county's nursing home facility.
Commissioner Bob Ziobrowski noted, “By hiring PFM, we have access to more financing options, and the transactional costs are far less than standard bond issuance fees. These last two refinances have validated our decision to hire PFM as financial advisors and facilitators.”