KEDC directors discuss bond refinancing

KEDC directors Tuesday night discussed refinancing two bonds totaling more than $2.5 million in order to obtain lower interest rates and save a little money in the process.

The current interest rates for the bonds hover between 6 and 7 percent and board members said they hope to refinance for around 4 percent.

One bond with a balance of $900,000 draws 6.75 percent interest and was issued for Synergy Park’s first shell building. Directors discussed paying off this bond but taking on approximately the same amount of debt to fund future road extensions at the industrial park. The current bond is taxable, while infrastructure debt is tax-exempt, Nobles said.

The second bond has a balance of $1.875 million and the interest rate is approximately 6 percent. The money was used to build Synergy Park’s roads, water and sewer infrastructure.

KEDC presently pays about $450,000 per year on both notes. With a new 20-year, tax-exempt bond, payments could amount to half as much. However, the board discussed putting the difference between the two payments into a special reserve account so the bonds could be paid off, if so desired, on the proposed bond’s “call date,” which would likely be 10 years from the date of issue.

“We would not be securing additional debt, just restruc- turing,” Nobles said.

Bobby Beane, board president, said KEDC could save around $164,000 over the life of the new bond, even after refunding bond costs are paid. If paid off earlier, the savings could amount to more.

Directors discussed the matter at length, including several payment options, but agreed “money is cheaper now” and it would likely benefit KEDC to refinance.

They plan to consult with Mike Byrd of Longview, senior vice president of First Southwest Company, about their options during their December meeting.

Last week the city council worked with Byrd and set parameters to refund two earlier bonds in hopes of saving more than $200,000 over the next few years.