The City of Vicksburg is refinancing its two general obligation bonds totaling $7.78 million.
The move involves paying off the remaining balances of a 2003 $5.8 million bond issue and a 2007 $16.9 million bond issue. The Board of Mayor and Aldermen Friday approved contracts with the Jackson law firm Butler Snow and Jackson-based financial consultants Government Consultants Inc. to handle the refinancing, which is expected to save the city about $295,784.
The city will sell general obligation bonds to fund the refinancing. They will be paid off in September 2018, the same time the current bonds were expected to be paid off. The move is expected to reduce the interest rate on the loans from between 3.7 to 4.125 percent to 1.4 percent.
All the fees involved with the move are already included in the refinancing total “so the city has no out-of-pocket expense,” said Government Consultants representative Demery Grubbs, who is a former Vicksburg mayor.
He said the bonds to refinance the debt will be sold by Aug. 1, to give the bond holders one month notice that they are going to be paid off.
“This is essentially like refinancing your mortgage with a better rate where your saving money,” Accounting Director Doug Whittington said. “This is just the sound, financial thing to do.”
“One thing we’re not doing,” said Lucien Bourgeois of Butler Snow, “we’re not extending any period of time. Your pay off is the same time as the bonds. You’re just saving money.”
Mayor George Flaggs Jr. said getting the refinancing done so soon “speaks volumes for this board. We got the bond rating restored and then we restructured the debt within 13 months. That speaks volumes. What this does, too, is let us now look at those capital needs and put them in some type of schedule on which we can pay them.
“I feel good about where we’re head financially,” he said.
The 2003 bond issue was used for utilities improvements and to install electronic gas and water meters, while the 2007 loan included money for the Washington Street bridge, street improvements and developing the first phase of the sports complex on Fisher Ferry Road. The city later took $3.7 million from the $4.1 million allocated for Fisher Ferry and moved it to pay for work on the bridge.