The Leavenworth County Commission is expected to save close to $1 million as a result of a refinancing action OKed Monday.
The Leavenworth County Commission is expected to save close to $1 million as a result of a refinancing action OKd Monday. The proposal, from investment bank Piper Jaffray of Leawood, Kan., concerns three different portions of the county’s outstanding debt — a bond from the Kansas Department of Transportation for the county’s emergency communication upgrade, another from the Kansas Turnpike Authority used to finance the construction of improvements to County Road 1 leading to an interchange on the turnpike and about $900,000 of the principal amount on an outstanding series of bonds from 2009. Greg Vahrenberg, managing director of Piper Jaffray, said his firm had two goals in mind when they started working on the issue. The first was to lower interest costs by paying back those bonds early and issuing new notes at a lower interest rate. “An equally important goal to simply achieving the savings was to make sure we matched up the repayment schedule for the refunded bonds with the sales tax revenue stream that you have,” he said. As previously scheduled, the KDOT loan was set to mature in 2018, after the countywide 1-cent sales tax approved by voters in 2006 was set to expire. That tax revenue is paying the debt service of that bond. To shorten the schedule for the KTA loan, the county will have to pay higher debt service costs in years 2014 through 2017. However, Vahrenberg said the county is still scheduled to save $920,293 from the refinancing action, even after costs are deducted. “We’re currently at an all-time record low interest rate,” he said, explaining the savings. The average interest rate before the refinancing action on that debt was about 4.5 percent, Vahrenberg said. According to County Administrator Pat Hurley, the new rate will be about 1.2 percent. But Commissioner Clyde Graeber said he wanted to make sure that the county would be able to handle the new schedule from fiscal standpoint. “Are we going to have sufficient sales tax to make these payments?” he asked. County Counselor David Van Parys said yes, and Vahrenberg said even with zero-percent growth in the sales tax revenues, that fund balance could handle the increased payments without going in the red. “The numbers look even better, obviously, if you see some growth in that sales tax,” Vahrenberg said. The commission voted to approve resolutions for the bond purchase agreement, the escrow trust agreement, agreement for the issuer or agent of a debt compliance policy.