Commissioners Court Approve to Refinance 2009 County Debt to Save Money
By: Jose G. Landa, Eagle Pass Business Journal, Inc., Copyright 2016
Maverick County Commissioners Court approved to refinance two 2009 County Bonds in order to save taxpayers money and issue new Maverick County, Texas Limited Tax Refunding Bonds Series 2016 at their meeting held on Monday, March 14, 2016.
During discussion of agenda item No. 50, Maverick County Bond Counsel Bill Avila presented Commissioners Court with information regarding the procedures for issuance of 2016 Series Bonds to refund or refinance two 2009 County Debt Bonds in order to take advantage of lower interest rates and save taxpayers money.
“The par amount that of the bonds that are being authorized, if the court approves it is $18,690 worth of bonds. That will be used to pay of the old 2009 obligations and pay the cost of issuance of setting these bonds.” said Avila.
Avila noted that Maverick County would be looking at a savings on the new refinancing.
Avila introduced Michelle Arogan to present a breakdown and the details on the savings and structure on what was being proposed.
Arogan stated that the refinancing of the old bonds was taking the existing higher interest rate set at 8.75% and lowering it through the new bond process ending at a lower interest rate of 7.1%.
“The savings will start from 2016 through 2034. Overall savings is $2,904,000 with a structured savings in 2017 and 2018 of about $700,000. From 2019 through 2034 an average of about $66,000 per year” in savings, said Arogan.
County Judge David R. Saucedo and Arogan discussed the certain impacts stemming from the issuance of the refinancing bonds to the county’s savings in INS in that time and other items pertaining to the agenda item.
“It is important for the public to know that these are not additional monies that we’re going out for. This is a refinance of what was already put on the books from 2009 that were not callable at that juncture. Fortunately, we’re at a place where we can go back and refinance this and secure a lower interest rate,” said Judge Saucedo.
Commissioners Court discussed the pertinent information provided concerning the proposed refinancing, including the calendar of payment which will be on a semi-annual basis and includes an interest and principal payment.
County Commissioner Precinct 1 Jerry Morales asked if the interest rate would be locked for a certain amount of time or would that be able to be negotiated along the years according to the economic health/status of the county.
Avila answered that if agreed on between the parties, these bonds would not be callable until 2026, ten years from now at the interest reflected on the agreement.
“ We have to wait ten years.?” asked Morales.
Arogan stated that the bonds do have a standard ten year call time. “The standard is a ten year call.” added Avila.
Commissioners Court discussed the ten year call time and how that would literally tie the county’s hands on the interest rate and the possibility of being unable to lower the interest rate before the 10 year call time similarly to the past 2009 County Bonds being refinanced.
Judge Saucedo noted “That puts us in the exact predicament that the previous administration , put us in. I don’t want to be held to that.”
Judge Saucedo pointed that one of the concerns was the fact that if the County would be able to secure their bond rating within a certain amount of time and by being locked into a set interest rate on the agreement that it would hinder the County from securing any lower interest rate on the Maverick County Texas Limited Tax Refunding Bonds Series 2016 until the ten year call date.
“That’s not what we signed up for. We’re being put back exactly where we were 7 years ago. And I know that we don’t want to do that. We have been paying interest for 7 years without lowering the principal that was owed. We’re trying to get out of those bad deals. That was a bad deal.” added Judge Saucedo.
“That was part of the sale . It was said you are all going to get your bond rating back and then you are going to come back and be able to get a better interest rate. That is not what is being presented here.You’re telling me we have to wait ten years.” queried Judge Saucedo.
Commissioners Court went into Executive Session to consult with legal counsel on the issue.
Once back in Open Session, Judge Saucedo opened up agenda item No.50 and asked if their was any motion or action being sought or considered by Commissioners Court.
“Based on the circumstances that we’re facing, I would like to make a motion.” stated Commissioner Jerry Morales.
“My motion is for legal counsel to approach in reference to these bonds at no more than 7% and to be callable at 7 years, no more than 7 years and no change on our premium.” said Commissioner Morales. Commissioner Pete Venegas seconded Morales’ motion.
Judge Saucedo called for any discussion or comments on the motion by Commissioners Court.
Judge Saucedo noted that he didn’t like the circumstances that the County was in and making a deal such as the one at hand.
“ Sometimes you have to do what you have to do. You can crow or talk about the fact that you weren’t in agreement with the original deal that was given , 7 years ago. You are in a circumstance, where you have the responsibility to the county to go forward and try to save as much money to the taxpayer and make sure they aren’t impacted anymore. Although I’m not in total agreement with the 7 year aspect of it and after being explained to that going any lower would probably cost us in the interest rate, I will agree to the fact that the way it’s structured it will save the county, $2,600,000 over the remainder of the life of the bonds. And if we can come back within the 7 years with a better interest rate, it does allow us to go out and do another refunding of those terms. Although their not the best terms in the world , it’s better than what we have right now.”said Judge Saucedo.
Commissioners Court approved agenda item No.50 unanimously to refinance and issue Series 2016 Bonds in order to save the County money on a lower interest rate available today.
