County votes to refinance gas tax bonds

Published 12:02 am Thursday, October 13, 2011

After receiving word the county scored an “A-plus” credit rating, commissioners decided Tuesday to refinance the county’s $4.1 million in outstanding state gas tax bonds. By doing so, commissioners hope to generate an estimated $123,000 or more in savings, if the market continues to fluctuate downward.

The rating, which is the highest end of the “A” category, is a first for the county, said County Administrator Brenda Petty.

“The rating really speaks volumes about the county,” she said. “Every other time we’ve done something like this, we’ve had to purchase insurance. Since our rating is so high, we didn’t have to do that this time.”

Reid Cavnar with Merchant Capital presented commissioners with the plan, which would not extend the term limit on the bond measure, at its September meeting. Cavnar urged the commission to capitalize on the decrease in interest rates, which are at a historic low.

“It’s a volatile market,” Cavnar said. “With the rates going up and down, we will be able to enter into an agreement today and lock in on the market while the rates are the best. From one day to the next, it could mean the difference of a quarter of a percent.”

The agreement sets the floor at a 3 percent return on the amount invested, he said.

“But that’s the least amount,” he said. “That amount depends on the rate that day, so with that said, we could invest tomorrow or two months from now. We’re going to watch the market every day and if we see something good, we’re going to jump out there.”

Commissioners have three options for utilizing the savings from the refinancing – one, an up-front payment to be used for road projects; two, apply it to the first payment on the bond measure; or three, lower the payment by $15,000 to $20,000 over the life of the bond; however, they did not voice their opinion on how best to utilize the savings Monday.

In other business, commissioners voted:

• signed a resolution declaring Oct. 23-29 as Pro Bono week in Covington County.

• signed a resolution declaring October and November as “Trash Bash” months and urged residents to clean up in their respective communities.

• approved the accounts payables and receivables for September.

• approved a bid for guardrails from H&L Construction in Troy.

• appointed Dr. Charles “Chuck” Burgess to the South Alabama Regional Airport Board.

• reappointed Billy Jo Stallworth and Brenda Johnson to the county’s department of human resources board.