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Tag: Parker Poe

  • Council refinances BFC bond

    BLYTHEWOOD – Town Council voted during a special called meeting last week to refinance the 2010 $5M Blythewood Facilities Corporation (BFC) bonds for a savings of $51,000 the first year and $25,000 annually, thereafter, for a total savings of $470,000 over the life of the bonds.

    The Town’s payments on the bonds currently run about $350,000 annually. The refinancing is through BB&T bank, which is offering a 3.65 percent interest rate that is 8.7 percent lower than the bond’s current interest rate of 4.33 percent.

    The more favorable refinancing is predicated by the release (refunding) of a $358,475 debt service reserve fund or escrow that the Town had to set aside for security at the time of the bond’s issuance in 2010. That $358,475 will now go toward reducing the loan.

    That debt service reserve fund, which represented principle and interest on the loan for one year, was initially required for security on the loan for two reasons, Parker Poe representative Brent Robertson said.

    “The assets being financed by the bond were not essential for governmental purposes such as an administration building or jail, but for Doko Manner and Doko Meadows. Plus, it was a brand new credit for a public offering. So investors were looking for additional security,” Robertson said. “We’re now in an environment with a private placement where an individual purchaser (BB&T) is buying the bonds. Now that it has a history of repayment, the Town is able to negotiate the release of that debt service reserve fund.”

    By moving forward with the refunding (release) of the reserve fund, it can be used to downsize the amount of bonds that the Town has outstanding.

    “With that reduction, the cash flow savings benefit runs about $25,000 a year with the initial year estimated at $51,000,” Robertson said.

    Council authorized the refunding last fall when it decided, ultimately, not to go ahead with the refinancing at that time, so from now forward, Council will not have to take any additional action to authorize the release of the debt service reserve funds.

    The bond is scheduled to be paid off in 2035.

  • Parker Poe suggests refinancing $5.5 M bond

    BLYTHEWOOD – Attorney Ray Jones of Parker Poe, the Town’s bond consultant for the $5.5 million bond issued by the Blythewood Facilities Corporation in 2010, told Council Monday evening that it might want to take advantage of an opportunity to refinance that bond under advance refunding which, he said, is a financing technique that allows an issuer to obtain the benefit of lower interest rates at a time when the outstanding bonds are not currently callable.

    Jones told Council that because Congress is considering dropping advance refunding as part of their tax reform law proposal, and because interest rates are lower than they may be in the summer of 2018 when the 2010 bonds are callable, they might want to act right away.

    Jones said that under current law, the Town may do an advance refunding now when interest rates are low and possibly lower than in summer of 2018. Projections are, he said, that the Town could save several hundred thousand dollars by doing so.

    Jones said that if the Town does not act now to refinance the bonds, and Congress passes the legislation, the Town would not be able to do an advance refunding until the normal call date time frame, which would be within the 90 days of the Sept. 1 call date.

    “We felt it wise to put the question before Council and are doing so with a first reading of the proposed ordinance on this refinancing,” Town Administrator Gary Park told Council. “If Council agrees, there will be a public hearing and second reading.

    Council voted to pass first reading and has scheduled a special called meeting on Dec. 8 to meet the bond issuance schedule.

    Parker said Jones would be at the meeting to answer questions.

  • What Did We Learn from County Bond Session?

    Records Don’t Back County Claims

    PARKER POE REP DODGES MEDIA QUESTIONS

    WINNSBORO – A year and a half after $24 million worth of bonds were issued to finance an economic development plan for Fairfield County, County Council brought in Parker Poe bond consultant Ray Jones Monday night to explain for the first time to the public the two kinds of bonds that were issued, how they were issued and how they were financed.

    Left unanswered, however, were pertinent questions from the audience, including one from The Independent Voice regarding clarification of how much it will cost the taxpayers of the County if Council pays off the $24 million bonds by issuing a number of general obligation bonds over a 20-year period as Jones suggested is the plan. Jones cut the question short and said he would be happy to explain it after the meeting.

    Jones left the meeting early, but was tracked down by The Voice and again asked to explain the question. He refused, saying he would answer it later.

    The explanation of the bonds and how they are financed was largely straightforward as Jones walked the Council and audience through what he called a very complicated financing process. In a power point presentation, however, he displayed quotes from The Voice that he labeled as “myths.” Those quotes criticized Council for not having explained the financing process to the public before the bonds were issued in March and April of 2013. Jones insisted there were nine instances during January, February, March and April of 2013 when the bonds were discussed thoroughly and in public.

    “I draw your attention to the meetings that were held on March 25, 2013; April 8 and April 15, 2013,” Jones said. “It was at those meetings that the documents associated with the installment purchase revenue bond financing plan were both discussed and approved by the Council.”

    While the bonds were indeed approved over the course of those meetings, digital recordings of those meetings offered no explanation or discussion by Council or then County Administrator Phil Hinely about the resolution passed that night, that it was establishing the non-profit Fairfield Facilities Corporation, the role of the Corporation or anything about how the bonds would be financed.

    While Jones said the information was included in the document Council passed, that information was not discussed by Council in open session. Instead, before the vote, Ferguson read only the title of the resolution: “To provide authorization for an installment purchase plan of finance for certain capital projects in the county and other related matters.” There was no discussion about the resolution.

    The County’s two newspapers did not print any information about any discussion by Council members regarding the contents of the resolution. Much of the discussions in those meetings that were referred to as “discussions of the bond” were actually presentations of the County’s economic development plan for projects.

    On Monday evening, Jones gave much emphasis to the fact that the meetings, votes and “public hearing (were) lawfully advertised and held regarding this financing and regarding the documents then before Council,” and that “in open session on April 15, 2013, a third reading of Ordinance 614, which authorized Council’s pursuit of this financing plan (was held).”

    Jones read from the documents that Council passed, but there is no record that the documents, the particulars of the issuance of the bonds or the plan for financing the bonds were discussed in open session at any of the meetings Jones listed.

    Jones shed new light on the financing of the $24 million bonds, saying that the County was not dependent on the revenue from the nuclear plant to pay off the $24 million bonds. Rather, he said, the County could continue to issue general obligation bonds over the life of the $24 million bond without going over the County’s current 10.4 debt millage. When asked by Tom Connor of Ridgeway if there was the possibility that there would ever be tax relief from the 10.4 debt millage over the duration of the payoff of the $24 million bond, Jones said, “This model says we will not go over 10.4 mills. That’s all I can tell you.”

    When asked by an unidentified woman in the audience, “How are we supposed to pay for this bond?” Jones replied, “The County is already levying a 10.4 millage debt service. As the (2009 $6.5 million) bond is paid down (in 2019), these new (general obligation bonds) will help the millage rate remain at 10.4 mills and that is sufficient for the County to repay the bonds in this model.”

    In his presentation Monday evening, Jones discussed five key points: the County’s goals, why the County pursued installment purchase revenue bond financing, whether it was explained to the public, whether it was a legal, sound financing structure and if it had accomplished the County’s goals. The document is on the County’s website. Read more on Jones’ presentation in the Oct. 3 issue of The Independent Voice.