The Rainsville City Council on Monday night heard from bond counsel and Director Brad Green with Raymond James Public Finance, who spoke of the opportunity to refinance the Northeast Alabama Agri-Business Center loan.
Rainsville Major Rodger Lingerfelt said the council had spoken about trying to lower the payments and save money on the loan for some time now.
Addressing the council, Green said they have been watching the refunding or refinancing of the Northeast Alabama Agri-Business Center loans for quite a while.
“We’ve looked at refinancing it under the city and then also looked at staying under the Rainsville Public Building Authority,” he said. “What that contemplates, is everything would stay the same. Staying separate from the city.”
Green said the total loan debt right now is $3.494 million, that’s the principal amount that’s outstanding on the loan. The original balance was more than $4 million.
Providing an overview of the fluctuation of the interest rates over the last 20 years Green said interest rates are at the lowest they’ve been over that period.
“It does appear the economy is opening back up and the thought in the market is that will drive growth and inflation, and when it does things are present interest rates generally go up,” he said.
Green said the city has a good credit rating and typically when you have a bond issue that’s not issued under the city’s credit, it's going to be issued under the public building authority of the city.
He said although the city’s rate is “A”, usually there is one notched difference between it and the PBA rating, which would leave it at A-.
The loan rate right now through the United States Department of Agriculture (USDA), the original financier, is a 3.75% fix rate.
“The new rate would be around 3% and the reduction in debt service over the life of the issue is about $37,000,” said Green. “That’s about $1,000 a month.”
The council discussion revolved around whether the loan should stay under the city’s Public Building Authority or be moved under the City of Rainsville.
Providing some insight, Green said the state constitution allows municipalities to issue debt equal to 20% of the access value of all the taxable property within the city limits.
“The way the PBA works, it’s sort of a workaround but it allows the debt to not count against the city’s constitutional debt limit,” he said. “The reason for that is because you can actually terminate the lease on a year to year basis, which is why your interest rate is a little high and the rating is different, but the other benefit is that this doesn’t go on your debt limit.”
According to Green, placing the loan under PBA provided space needed if the city needed to borrow money on projects down the road.
If the council elects to go forward, he said they are not extending the debt and it would remain in the same time frame with a lower interest rate and payments.
“Everything would stay the same, we would just be selling bonds in the public market to refund the USDA and you would have this new loan at today’s interest rate,” said Green.
The council unanimously voted to approve moving forward with the refinancing procedure during Monday night's meeting.
The council also heard updates from the following departments:
Rainsville Fire Chief Willimac Wright announced, Jake Mcclung recently completed and passed EMT school as well as all other requirements to become a fireman.
He also reminded the public the Alabama Department of Environmental Management annual burn ban begins May 1, 2021, as part of ADEM efforts to protect air quality in various areas of the state.
Rainsville Chamber of Commerce Executive Director Sandy Goff announced the Rainsville Chamber of Commerce Scholarship Golf Tournament at the Rainsville Golf and Country Club on Saturday, March 20.
The council also:
• approved the hiring of Greg Welsh, full-time CDL driver for the Sanitation Department at the rate of $14.63.
• approved to bid out a pest control contract for all the buildings in the city of Rainsville (close bids).
• approved upgrades to the Public Works computer. No cost was provided.
• approved Billboard Ordinance 03-15-2021.
• approved the hiring of Austin Peppers, as a part-time police officer for the Rainsville Police Department at the rate of $14.97.
• approved the hiring of Dona Johnson as temporary magistrate for the court at $40 per court session.
• approved the purchase of a grill at $799 for the Rainsville Police Department to be utilized during training
• approved the purchase of a laptop at $500 for the Rainsville Fire Department to be utilized for training.
• approved Resolution 03-15-2021, to the surplus of a 2002 Ford Expedition from the fire department.
• approved headwalls and street repairs involving sewer pump station on Wilson Street from Boozer Construction at the cost of around $15,000 to $25,000 depending on all the work needed with project funds coming from the sewer and street department.
• approved adding Tina Hosch to the Zoning Board to replace Zane Mitchell who resigned.
• approved to empower the major to sign Alabama’s Mountains Rivers and Valley (AMRV) Grant application for $10,000 for the Rainsville Wastewater Treatment Plant which will aid in the upgrading of the Supervisory Control and Data Acquisition (SCADA) System
The next council meeting is scheduled for April 5, 2021, with a workshop at 4 p.m. and a regular session at 4:30 p.m.