Bay council approves bond restructuring
By Dwayne Bremer
Jun 6, 2014, 18:41
The Bay St. Louis City Council on Wednesday approved refinancing a $1.6 million utility bond after haggling over the matter for nearly a month.
The bond, which the Favre administration obtained in 2005, had four years remaining on its term and a $397,000 payment due at the end of this month.
The council approved refinancing the bond and extending its term by another year, to total five years.
The bond will be acquired through Hancock Bank at a rate of 2.67 percent per year. It will cost the city an additional $197,000 in interest, but refinancing it will allow the city to skip this year's payment, which will provide some much needed cash-flow relief, officials said.
In addition to the $397,000 payment due in July, the city must also pay by November the remainder of a $500,000 line of credit secured in last December.
Mayor Les Fillingame said Monday that if the city did not refinance the loan, then it would have to raise utility rates by as much as $12 per month per household.
Although the council refinanced the bond, a rate increase may still be possible.
Fillingame said Wednesday that it will cost $9.81 per customer, per month, to pay for the bond, based on the city's current 3,100 customer rate.
The $9.81 figure, however, does not automatically mean the city will increase rates, officials said Wednesday.
Ward Five Councilman Joey Boudin said he wanted the city to enact some cost-cutting measures and new ways to generate revenue.
Boudin suggested revenue-generating items such as collecting rent from the Hancock County Chamber of Commerce, which is using city property on court street; raising fines and court costs for offenders in municipal court; adding a surcharge for medical response by the fire department; and more.
"I don't want to raise rates until we do everything we can to cut and generate more money," he said.
Fillingame said Friday that the debt payment is currently being taken out of funds generated from the utility revenue. He said he would like to see a line-item on residents' bills specifically for debt services.
"We are not sure yet if what we are generating will be enough to cover the debt service," he said.
The council has set another meeting for June 17 to review the utility budget and decide if any rate hikes are necessary.