Since 2013 the Town has been receiving financial advice through Davenport & Company, LLC. On July 1st, the Town Manager and Treasurer met with Davenport staff members to review the Town’s debt and discuss potential refinancing opportunities.
The Mirror contacted Treasurer Deborah Pocock to provide background, clarity and the benefits of refinancing. Below is an overview provided by Ms. Pocock:
The Town has two debts that may be favorably refinanced at this time.
One of them is the Series 2006 VML/VACO Bonds, which carry interest rates of 4.4%-5% and have a maturity date of 8/1/2026. Outstanding PAR (the face value of a stock or other security, as distinct from its market value) is $965,000. Market interest rates are currently lower, and the estimated savings net of the costs of bond issuance is $123,800, or $11,250 per year.
The second debt under consideration is the 2013 PNC Bank Loan, with an outstanding balance of $2,133,000.
The current interest rate is 2.65%, however in the tenth year of the loan, which will be 3/1/3024, the interest rate will be reset. Refinancing at this time will secure a low interest rate for the entire remainder of the loan period, which will most likely reduce future interest payments.
Town staff has worked with both VML/VACO Finance and Davenport & Company to discover the best plan of action. Both companies have provided services to the Town in the past, and they are equally reputable. VML/VACO offers a $5,000 grant, as well as having the lower processing rate. Therefore VML/VACO will be coordinating the process for the Town.
VML/VACO will return to the town with the results of their search, and will work with staff on a recommendation for Council. Council will review the proposals and decide whether or not to proceed with the refinance opportunities on August 18th, 2016.