Toccoa Tables Decision on GEFA Debt Re-financing

February 12, 2013

Toccoa City Commissioners put off a decision on re-financing the city’s water/wastewater fund debt with the Georgia Environmental Finance Authority to obtain more information.

Monday, city commissioners tabled a proposal to re-finance the debt pending getting more information from the firm involved.

Last Monday, city commissioners heard from the firm Robert W. Baird and Company of Atlanta about the possibility of re-financing the city’s GEFA debt.

As of January 1, the city has about $6.15 million in GEFA debt outstanding through various loans with interest rates ranging from 3.75 percent to 5.21 percent.

Baird officials have told the city they estimate that the city could save around $300,000 by re-financing the loans to a total of an estimated 2.25 percent and keeping the same end date for the loans, which is April 2021. A second estimate provided Monday showed that with higher payments than the first option and re-financing the loan at an estimated 2.175 percent, the city could save about $360,000 over the life of the loan and shorten the loan length by about six months.

Toccoa City Commissioner Ron Seib said he supports re-financing, but wants to see more information.

Specifically, Seib said he would still like to see how much further the city could shorten the maturity by maintaining the same debt payment.

“If we simply re-fi, we know we are going to have a cash flow savings,” said Seib. “The question I asked is that if we kept the same level of payment in play with the lower rates, (how) would that impact our maturity? If we paid at the same rate that we were paying, how much impact would that have in terms of years? Because if we are paying basically half the rate, I was thinking it would have cut maybe three years of the maturity.”

In addition, commissioners requested information about paying the re-financing fee up front rather than financing it into the loan and what effect that would have on the total savings.

Toccoa City Manager Mike Jackson requested that commissioners e-mail him their questions and he would forward them to Baird for the answers.

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