VALDOSTA – The refinancing of some city loans could save Valdosta $2 million during a 13-year payback period.
It will be like refinancing a house, said Chuck Dinkins, Valdosta finance director, during the Valdosta City Council meeting last week.
The city originally borrowed these loans, of which there are six, from the Georgia Environmental Finance Authority for water and sewer improvements.
When the loans were received, they were marked with the interest rates of the time, some of which were low, Dinkins said.
Recently, they became low again, and the city tasked a finance adviser for the next steps.
“He went out and he found an RFP (request for proposal) which is a document we send out to the banks to say ‘Hey, we want to borrow this much to do this. What kind of rate would you give us?’” Dinkins said.
The adviser sent it to an RFP for four of the six loans to Truist Bank and another to Synovus Bank. Only one of the new rates was found acceptable from Truist, whereas all rates were acceptable from Synovus.
“We got back a rate of 2.29% where we had some notes as high as 4% (before),” he said. “We’ll move over the life of the note starting in 2021 going to '33.”
With the original financing, rates between 1.4% to 4.1%, the total payback would be a little over $38 million. Under the new financing, between 1.4% to 2.29%, it will be about $36.5 million.
“It’s going to take us 13 years to realize that, but that’s a substantial savings,” Dinkins said. “Some of the notes we’re saving more on than others, but in each case, we’re seeing savings.”
Dinkins is referring to two other loans the city chose not to refinance as their rates were already low at 1.4%. In any case, the city will be paying back about $150,000 a year per loan.
Dinkins made the presentation during the City Council meeting in the form of two resolutions – the consideration of a master bond resolution and consideration of the first supplemental bond resolution both for refinancing the city loan agreements with GEFA.
Council unanimously agreed to approve both.
It also approved the purchase of protective equipment for the City of Valdosta and Valdosta City Schools.
The purchase will come from the 2020 Community Development Block Grant which allocated $756,050 via CARES Act funding.
The purchased PPE won’t just be masks, gloves, etc., but rather sanitizing equipment for city buildings and school system buildings, one of which includes installing ultraviolet light machinery into a building’s HVAC system, and the chemicals used in tandem.
It’ll be similar to the equipment used in companies Ecovasive Southeast Infection Control which will spray and sanitize a substance that has a 90-day residual virus killing effect.
The goal is to save the school and city systems money in hiring contractors and the hope is to use the PPE against more than just COVID-19, such as flu, colds, etc. – germs in general.