City of Plaquemine could save over $200,000 by refinancing bond
The Plaquemine Board of Selectmen at Tuesday’s meeting unanimously approved moving forward on refinancing one of its bond issues.
The vote only allows attorneys to research the matter and does not obligate the city to go any further on the refinancing if the savings aren’t were the city hopes they will be.
Hugh Martin of Foley and Judell law firm in New Orleans and the City of Plaquemine’s bond attorney said the city could save about $215,000 by refinancing a bond issued in 2008 for improvements to the city’s sewer system.
“In recent years, the interest rates have fallen dramatically,” he told the board. “That gives us the opportunity to refinance the old bonds and save money.”
Martin said the savings would be about $30,000 over the next 15 years and compared the action would be “much like refinancing the mortgage on your home.”
“These savings are computed after all the expenses of the refinancing are paid,” he said.
Consultant Steven Noscka of Trinity Capital Resources, who will be assisting Martin, said the bond in question now has an interest rate of four and a half percent while the current bond rate is three percent.
The two attorneys said they would return to the Board of Aldermen for its approval once they have all the facts. At that point, aldermen will decide whether it wants to refinance the bonds.
Mayor Ed Reeves, after the two presentations, said he hoped the savings of the bond refinancing would come to fruition.
“I hope we can save that $214,000 because I’ve got big plans for that money,” he said.
In an interview Thursday, Reeves said his first priority for the monies is a walking trail on top of the levee near the Plaquemine Locks. He said the bond refinancing was among his first plans when he was took office at the beginning of the year.
When he was first elected, he contacted Martin, who handled the city’s first bond issue in 1990 to find out if the city had any bonds that were eligible for refinancing.
“I told him, ‘Look at our bond portfolio and see if there’s any bonds that we can review,’” Reeves said. “He called me and said you got one, a 2008 series bond that we have out on our sewer plant.”
Interest rates were higher then, he said, running about 4 and a half percent, “but they’ve dropped to about three right now. If we can get it refinanced at three percent, we can save about $214,000…that’s about $33,000 a year, so it looks pretty good for us.”
“If rates come in at higher than what we’re hoping for, we don’t have to go any further and there’s no out-of-pocket expenses to us,” Reeves said.