CORRECTED: Bay discusses refinancing existing bond, may borrow more $$$ later
By Dwayne Bremer
May 23, 2014, 20:01
The Bay St. Louis City Council on Tuesday agreed in principal to refinance an existing $1.6 million utility bond and may borrow more for capital projects before the new budget year begins in October.
The council on Tuesday heard from consultants Lucien Bourgeois and Steve Pittman, who were recently retained to investigate the pros and cons of refinancing the city's 2005 utility bond.
The 2005 bond was for $4.2 million to be paid back over 13 years.
The city has four payments remaining with this year's $400,000 payment due in July.
By refinancing the loan, the city would be able to skip the July payment. The money for the bond payment would then be used to pay off a line of credit the city secured last November to pay money owed to the Hancock County Utility Authority and Solid Waste Authority, officials said.
"Refinancing the bond will allow us to have a little breathing room with our cash flow," Mayor Les Fillingame said Friday. "It would have been hard for us to meet both obligations."
The council questioned Bourgeois and Pittman about rates and lengths of time on the refinanced loan. Earlier this month, Fillingame suggested the city refinance the current bond and borrow an additional $2.4 million for a host of capital projects.
"This is how municipalities fund capital projects," Fillingame told the council Tuesday. "We can dedicate these funds to whatever projects you feel necessary."
Council members said Tuesday that they are willing to refinance the existing $1.6 million bond, but they were hesitant to borrow more money.
"I need a little more time to look at this," Ward Five Councilman Joey Boudin said. "We got this packet about lunch time and we were being asked to vote on it a few hours later. We need to study it to see what is best for the city."
Paying for the bond is another issue.
If the council decides to just refinance the existing bond, it could reduce its yearly debt obligations, depending on the term of the loan.
If it borrows additional capital, then that could result in a new tax dedicated to pay it off, officials said. Boudin has suggested cutting expenses and trying to raise revenue before raising taxes.
Fillingame said Friday that the council will decide by June 3 on what kind of terms it wants on refinancing the $1.6 million bond.
After that, he said, it will decide what it wants to do moving forward.