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City issues bonds to restructure water debt

POSTED: April 9, 2014 4:00 a.m.

Concluding nearly a year of talks, the city of Dawsonville has issued bonds to restructure debt on previous loans from the Georgia Environmental Finance Authority and U.S. Department of Agriculture.

According to the city, its "AA Stable" rating from Standard and Poors on the bonds will allow the city to save an estimated $1.95 million, or $684,000 on a present-value basis, about 14 percent savings as a percentage of refunded bonds.

During a special called work session in April 2013, the city council heard presentations from representatives of Merchant Capital on bond and loan refinancing for water and sewer infrastructure.

During the authority's June 2013 meeting, the Dawsonville Downtown Development Authority voted to draft bond proceedings to aid the city in refinancing $4.9 million in water infrastructure debt.

According to City Attorney Dana Miles' presentation during the previous meetings, the city is projecting a sizable savings.

"We are taking all of the city's water and sewer debts and combining it into one debt," Miles said during a previous meeting. "Most of that debt is in the 4-6 percent interest rate. By going through the DDA, we will be getting a lower interest rate."

By consolidating the debt, the city will have to pay just one interest rate, as opposed to six to eight sets, according to Miles. It will consolidate the city's debt into one source that will be paid off over 22 years.

The authority voted to allow then-chairman Nick Nicodemus and then-secretary Sid Manning to draw up documentation to allow bonds to be issued for the sum of $5.25 million, the extra amount allowing for any contingencies and payments for bonding agencies.

The city voted during a special called meeting on March 26 to allow the bonds to go to market March 31. The authority agreed to that plan during a special called meeting the same day.

On April 2, in a joint meeting between the city and the authority, the two entities voted unanimously to allow supplemental bond resolutions and bond purchasing agreements for the 2014 bonds.

These resolutions will allow the two organizations to begin paying back the bonds when they reach maturity in five years.

 

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