City saves $317K on bond refinancing

Published 10:35 am Friday, August 1, 2014

The City of Vicksburg has saved $317,964 by refinancing two general obligation bonds.
The move involved paying off the remaining balances of a 2003 $5.8 million bond issue and a 2007 $16.9 million bond issue. “We were able to lower our true interest cost to 1.25 percent, creating a significant savings for the taxpayers of the city,” said Mayor George Flaggs Jr.
The savings came as a result of the Board of Mayor and Aldermen working to get the city’s credit rating restored by Moody’s Investment Services, a New York-based provider of credit ratings and risk analysis.
The city will sell general obligation bonds to fund the refinancing. They will be paid off in September 2018, the same time the old bonds were 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 1.25 percent.
The bonds to refinance the debt will be sold by Aug. 1, to give the old bondholders one-month notice that they are going to be paid off.
Moody’s in February 2012 pulled the city’s A-1 bond rating, “because it (Moody’s) believes it has insufficient or otherwise inadequate information to support the maintenance of the rating,” according to information released when the company pulled the ratings.
“Vicksburg’s last completed audit is for fiscal year 2008 with only unaudited financial information,” the company’s release indicated, adding. “Vicksburg’s lack of current audited information to be insufficient to effectively assess the credit worthiness of the city.”
The city received a strong rating of A2 bond rating from Moody’s on June 30, one day short of the first anniversary of the board’s inauguration.
The city’s 2008 audit was completed in 2012. The 2008, 2009 and 2010 audits were competed in 2012. The 2011 and 2012 audits were done in 2013, and the 2013 audit in May.
“Getting our rating restored is a great indication of how far we’ve come in getting our financial house in order,” said Flaggs. “We have been focused on it since day one.”
The rating reflects the city’s low debt profile and healthy reserve levels. To address the problem with timely audits, the city hired an in-house CPA to ensure timely filings.
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.

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