By Kim West
The Limestone County Water & Sewer Authority expects to save more than $500,000 this year by taking advantage of lower interest rates and refinancing a Series 2004 bond issue.
The board of directors voted 5-0 during its regular monthly meeting Thursday afternoon to give Board Chairman Jim Moffatt the authorization to act on the board’s behalf in moving forward with the bond refund within the limitations outlined in a parameters resolution.
The authorization was required because the LCWSA won’t receive its latest bond rating from Standard & Poor until next week. The parameters resolution requires the interest rate for refinancing the bond may not exceed 2.7 percent.
“I expect the same A-plus rating we got back in 2010,” said Scott Bamman, an accountant with the Montgomery bond underwriting firm, Thornton Farish Inc. “We can’t sell bonds until we get the rating in hand — it’s just not good business. We should hear back from S&P soon and once we get the rating, we’ll go to the bond market next week and get the bonds sold … we’ll put the proceeds into an escrow (account). That escrow will be in place until we call, or redeem, the bond on Dec. 1 of this year.”
An escrow account contains money granted to a person or entity but held by a third party and only released after specified conditions have been met.
During the Dec. 20 meeting, the LCWSA authorized Thornton Farish as underwriter and Haskell Slaughter Young & Rediker of Birmingham as the bond counsel firm to pursue refunding the bond issue.
During the December meeting, Bamman estimated that refinancing the bond would give the LCWSA a present-day savings of $494,00. But he said during Thursday’s meeting that the bond market has improved since then and the actual present-day savings would be $523,000.
“These people will usually do the refunds if the savings is 5 percent or more, and we’re getting a savings of nearly 15 percent (with this bond refund),” Bamman said.
The interest rate on the debt service of the bond was set at interest rates of up to 4.75 percent but refinancing the bond would allow the LCWSA to decrease the interest rate from approximately 4.7 percent to 2.7.
In other business the LCWSA:
• Approved a final change order of $40,734.80 for sewer improvements by Apel Machine & Supply Inc. of Cullman for the Johnson Elementary School force main project. The change order is in a deductive amount of $79,652.51 for the original contract amount of $380,549.54, mainly due to the lack of sod needed for disturbed areas, the minimal amount of silt fence required and the non-use of additional work where directed by the project engineer, according to a Jan. 10 letter from the general contractor, Hathcoat & Davis Inc.
• Accepted a request from LCWSA General Manager Byron Cook to classify six vehicles and two pieces of equipment as surplus and allow LCWSA employees to make offers via sealed bids after current values are determined. Three of the vehicles have more than 112,000 miles, while the other three exceed 250,000 miles and all six are at least 11 years old. The available equipment is a 1995 Rawson Koening utility bed and a 1995 mower Bush Hog.
The next meeting will be at 3:30 p.m. Thursday, Feb. 28, at the LCWSA Customer Service Building.