Parkersburg Utility Board votes to refinance bonds
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PARKERSBURG -- The Parkersburg Utility Board voted Tuesday to refinance bonds to save an estimated $300,000 over the next five years.
Originally issued for $35 million in 2005 to fund upgrades to the wastewater treatment plant, the bonds were refinanced in 2015 to lower the interest rate from 4.23 percent to 2.6 percent. With interest rates even lower now due in part to the economic effects of the COVID-19 pandemic, the PUB can refinance again at an interest rate of 0.8 percent.
"It's difficult to describe how low they (interest rates) are," said Greg Isaacs, with investment banker Crews & Associates, who was participating in the meeting remotely.
The refinancing process would sell new bonds to cover the remaining debt at the lower interest rate. Overall, the utility is projected to save about $65,000 a year in debt service.
"Is there any reason we wouldn't do this?" PUB member Mike Evans said.
"It would make no sense not to pursue this," said Parkersburg Mayor Tom Joyce, the board's chairman.
Most of the discussion focused on whether the board should issue a request for proposals from local banks to sell the bonds or simply go through Crews & Associates, which issued the bonds and did the last refinancing.
Bond attorney John Stump, also participating remotely, said there was no legal requirement to do so and he did not expect much interest among local commercial lenders.
But there is no expected increase in cost if the utility opts to seek proposals, Stump said.
"If it's not going to cost us any money … I think we should at least give the local banks the opportunity to say, 'Not interested,'" Joyce said.
The board voted 5-0 to authorize Stump to begin preparing an ordinance for the refinancing, which will require three votes by Parkersburg City Council to pass. If a local bank makes a proposal and the board accepts, the ordinance would need to be amended to reflect that, Stump said.