Comms approve bond refinancing ordinance
With favorable interest conditions, the Lycoming County commissioners approved an ordinance allowing the county to refinance their bonds at significant savings, Thursday.
There are no new covenants or agreements involved in the bond refinance — which is not to exceed $17.27 million — but the payments will decrease, said Chris Brewer, of Dinsmore and Shohl, county bond counsel.
Pending the rating of Lycoming County by Standard & Poor’s, a financial services company, the bonds will begin to be sold late next week, said Commissioner Jack McKernan.
“Typically when people look to do refinancing like this, industry average is somewhere around 2 to 3 percent,” he said. “We suspect that we will see at least a 5 percent savings and the indication is right now that we’re probably going to be way above that.”
To help explain the matter to the public, Brewer said it was akin to refinancing on a home. First the individual’s credit score would be determined, then the house would have to be appraised.
The transactions will move forward as long as savings reach a value of at least 5 percent of the amount being refunded, as outlined in the ordinance.
“That’s twice what we often see in the industry for a valuable and worthy sort of refunding endeavor,” said Brewer. “Yet, at the moment, it’s under what we hope to be able to accomplish.”
“It’s not unlike paying points on a mortgage, you’re going to get the best rate that can be obtained,” he added.
The $17.27 million, however, is higher than the actual amount that will be sold.
“We do that for some legal/technical reasons in terms of how the schedules have to be composed and presented to the state for approval,” said Brewer. Secondly, due to market volatility many issues have sold with premium interest rates, but also some sold at a discount.
In adopting the ordinance, the commissioners are exploring the opportunity to refinance bonds that were first issued in 2010, and now at a savings, he said.
“That will be a benefit to the citizens of the county because it will reduce your debt service and would allow you to borrow up some funds for needed projects,” Brewer added.
Commissioner Rick Mirabito credited past commissioners’ and employees’ work in helping the county be fiscally sound.
“(It) helps us immensely when we have to go to the bond market,” he said. Investors are able to have confidence in Lycoming County “that this is not an entity that’s going to fall apart.”
Commissioner Tony Mussare was also present.
The next meeting is scheduled for 10 a.m. Tuesday in the briefing room at the Executive Plaza, 330 Pine St.