By. Bryan Rothamel, Field Officer
The conditions are starting to come together for Fluvanna County to make a decision on water infrastructure.
One of the biggest hurdles is how to finance it and right now, bond rates are extremely low.
“You are never going to see money this cheap right now,” Tony O’Brien (Rivanna District) said following a presentation from Raymond James & Associates, the county’s financial advisor.
Dianne Klaiss, senior vice president of Raymond James & Associates, agrees with O’Brien’s assessment, “If you have to do a capital project, now would be a good time to finance it.”
Rates were their lowest in history November 2012 and have stayed below the historical average since.
Unfortunately, another hurdle in adding to the county’s debt load is its financial history. In FY15, the current fiscal year, the county is paying $7.62 million for debt service. The total budget is $80 million but includes borrowing another $12.48 million.
Two previous projects are eligible for refinancing and the advisor is recommending the board start the process of doing so.
The Series 2005 bonds issued for the courthouse is at 4.29 percent interest rate and has a current balance of $1.86 million. It is subject to acceleration on Oct. 15, 2020 with a $720,000 final balloon payment in 2026. The county is currently scheduled to pay $2.51 million for the rest of the bond.
The two options to refinance the Series 2005 bonds is to have the same maturity date or to match the current debt service payment. Both will have a savings over the course of the loan compared to the current agreement.
Keeping the same maturity date would have a $204,000 savings but mean higher payments until 2026. Refinancing to keep the $162,000 payment of this year means only saving $157,000 but extending the maturity date to 2029.
The other bond is the Series 2006 bonds for the library. It matures in 2022 but has $1.75 million left. The county is currently scheduled to pay $2.07 million over the course of the bond. A refinance could save $116,000 overall with the same maturity date.
This fiscal year the county is considering paying for a fire truck and projects at the middle school with two bonds.
A fire truck bond of $550,000 would have a maturity in 2025 with annual payments of $65,000. The middle school bond projects are for $5 million with debt service payments around $500,000, changing depending on the bond length choice of 10, 15 or 20 years.
The Board of Supervisors is expected to take up the refinancing of the first two bonds and issue the other two bonds soon.
The Free Enterprise Forum’s coverage of Fluvanna County is provided by a grant from the Charlottesville Area Association of REALTORS® and by the support of readers like you.
Photo Credit: Fluvanna County