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BOC hears plans for advance bond refunding

CONYERS -- The Rockdale County Board of Commissioners heard a presentation Tuesday on the proposed advance refunding of $102 million in 2005 bond debt issued for the Water and Sewerage Authority.

Dick Layton, managing director with Robert W. Baird & Co., told commissioners that the county can anticipate savings of approximately $7.9 million over the remaining 16 years of the bonds, or $480,000 per year. Layton has been the county's bond advisor for more than 25 years.

Water officials have indicated that the savings could be used to finance projects such as expansion of the sewer system in support of economic development.

The Water and Sewerage Authority voted unanimously in October to proceed with the advance refunding, as long as they can realize a minimum savings of 4 percent of the refunded bonds. The Authority recommended that the county also approve the refunding.

The BOC must approve the refunding in order for it to go forward because the debt of the Water and Sewerage Authority is guaranteed by the BOC.

BOC Chairman Richard Oden thanked the Water and Sewerage Authority and Chairman Elaine Nash for pursuing the refunding option.

"This is a God-sent opportunity for us, and we just happen to be in a good position to take advantage of that," said Oden.

Layton said that it will take about eight weeks to prepare the bond offering documents. In the meantime, he said a close eye will be kept on interest rates to ensure that the minimum 4 percent savings is achieved. Layton said all of those involved in preparing the bond offering understand that they are "working at risk on this."

"Once all the documents are ready, then they will look at the market and see if they can achieve the savings level set by what the interest rates are at that time," said Layton. "If not, they will check on a day-to-day basis until the savings are available."

If interest rates remain low enough for the 4 percent threshold to be met, Layton said the BOC would need to give formal approval at the commission's first meeting in January with closing at the end of the month.

According to the Municipal Securities Rulemaking Board, a refunding is basically a refinancing of existing bonds. In contrast, in an advance refunding the proceeds are not used to pay off the existing debt but are placed in an escrow account, with the proceeds used to pay the debt service on the bonds being refunded on their scheduled call dates or maturity dates.

The 2005 bonds to be refunded were issued in order to advance refund the Authority's 1996 and 1999A bonds, which resulted in a savings of $3.5 million. Those funds, in addition to $6.5 in additional bond proceeds, were used to fund water and sewer system improvements.