County to refinance school bond

Published 3:00 pm Sunday, May 7, 2017

Refinancing an old school bond will save the county a total of $147,000 in the coming years.

The Beaufort County Board of Commissioners voted unanimously to accept a proposal to refinance money still owed on a General Obligation School Bond issued in 2008 in an effort to lower debt service cost to the county.

The bond came about via referendum during a July 20, 2004 election, when Beaufort County residents voted in favor of a $7 million bond that would be used for new construction and other projects at existing county schools, according to county Manager Brian Alligood. The original bonds were sold in February 2008.

Commissioners voted in April’s meeting to explore refinancing the bond through an advance refund, meaning a new bond will be issued by a financial institution at a lower rate than the old bond.

On behalf of the county, financial advisers Davenport & Company LLC sent out requests for proposals to more than 50 national, regional and local financial institutions. At the May 1 meeting of the board of commissioners, Davenport Senior Vice President Mitch Bruglio Jr. told commissioners the returned response on RFPs spoke to the county’s financial standing.

“(The county) received nine back. … which is a very good response level. People were very interested,” Brigulio told commissioners.

Wells Fargo returned the lowest interest rate at 2.17 percent, however, its rate would not be locked in until right before closing and would be subject to market changes, as well as any change in federal tax law, according to Brigulio.

The next two lowest interest rates came from Georgia-based Pinnacle Bank, at 2.22 percent, and BB&T, at 2.33 percent.

The county would save $13,000 per year with Pinnacle as opposed to $11,000-$12,000 per year with BB&T’s proposal.

Commissioners voted unanimously to accept the Pinnacle proposal.

“As of June 30 of this year, we show that the remaining balance on that bond would be $3.75 million,” Alligood said. “The life of the loan will be the same. We’re just saving about $13,000 a year.”

The Local Government Commission, a commission manned by North Carolina Department of State Treasurer staff, must approve the refinancing before the estimated closing date of June 20.