Refinancing could save Troy $1.1M
Published 8:46 pm Tuesday, October 8, 2019
The Troy City Council got its first look Tuesday night at an ordinance that could save the city more than $500,000 over the life of a $5 million bond it issued in 2009 to recruit CGI.
And the council will have another refinancing to consider at it’s next meeting that would bring the total savings to approximately $1.1 million.
“When the city borrowed a little over $5 million to recruit Cgi in a joint venture with the Troy University Foundation, it was done at an interest rate of about 4.75 percent,” said Rush Rice, financial advisor for the city. “Now that bond is callable and we’re in a climate with extremely low interest rates. There’s $4.2 million outstanding. So we looked at refinancing it with bank financing instead of a bond issue. It would save the city a tremendous amount in fees and ratings.”
The low bidder for the bank financing was Synovus Bank, offering a fixed interest rate of 2.78 percent over the remaining 12-year life of the debt. Rice said the new lower rate would save the city $518,000 during that time.
Mark Snead of Synovus visited the council during its executive committee session to meet the members after Synovus has now twice been the low bidder when the city has sought bank financing. Synovus was previously the low bidder on the Kimber financing.
“We really believe in the City of Troy and its trajectory,” Snead said. “We’ve just showed again our strong belief in where you guys are going. We appreciate the opportunity and continuing to grow this relationship.”
Rice said all local banks were invited to bid as well, but they all respectfully declined. Rice said this refinancing is not feasible for all banks.
The council can vote on the ordinance at its next meeting and also expects to hear its first reading on another refinancing ordinance that would reduce an interest rate on money borrowed during the recruitment of Golden Boy Foods. The current rate is about 5 percent and Rice and Mayor Jason Reeves said the expectation is to again lock in a rate below 3 percent.
The council also passed a resolution Tuesday that will require all new sewer customers to be located within the Troy corporate limits.
“We’re seeing a lot of growth right now and we want to make sure that rowth is managed, measured and that we’re doing the things we need to do,” Reeves said. “There are multiple areas outside of the city limits that want access to city services. But when you’re outside the city limits, there is no zoning authority, no planning authority or anything of that nature. If we’re going to allow people to come in and possibly take advantage of our services, we need to put them on the same playing field as everyone we service inside the city limits.”
Reeves said the resolution does not affect any current City of Troy sewer customers outside of the city limits, as they are grandfathered in under the resolution.
But new sewer customers must be inside the city limits or those properties will require annexation into the city before sewer access can be given.
In other business, the council:
• Approved the sale of land adjacent to Baker Metal Works and Kimber Manufacturing to Baker Metal Works for an expansion of the current facility at a price of $32,700.
• Approved a transfer of the liquor license at The Red Apple due to a name change.
• Approved a bid from Bill Jackson Chevrolet to provide six Cherolet Tahoes for the Police Department at a cost of $237,507 ($39,507 per vehicle).
• Held the first reading of an ordinance to rezone 76 acres of property from residential zoning to the new Tourism Development District zoning. The property is planned to be the location of the Conecuh Ridge Distillery. Councilwoman Stephanie Baker noted that the Tourism Development District is completely separate from the council’s recently discussed entertainment district, to clarify any confusion residents might have.
The Troy City Council will meet again on Tuesday, October 22, at Troy City Hall. The executive committee will meet upstairs at 4 p.m. and the city council will convene in the City Council Chambers at 5 p.m.