WATER BOND TO BE REFINANCED 4-18-12 LMS
The City of Salmon has officially instructed Finance Director Amy Fealko to pursue the steps necessary to refinance a 1990 Water Bond which currently has a balance of $885,000.
In March the council authorized a $200,000 payment to lower the principle amount owed to around $685,000.
Fealko explained that by reducing the debt by $200,000 and keeping the same yearly payment level at $72,000, the debt can be shortened by seven years meaning a pay off date of 2023. The move will result in a present-value savings of 23.59 percent which translates to $208,745, after related expenses.
Fealko said the city has $150,000 in a reserve account and Zions Bank Public Finance is reviewing best use options for that money and what savings, if any, could be gained by applying it to the 1990 Water Bond principal to further reduce the debt.
True to form it costs money to make money. Fealko presented and explained an agreement for Bond Counsel services. The Bond Counsel renders the necessary legal assistance and advice relative to the authorization, issuance, sale and delivery of the refunding bonds of the city issued through Idaho Bond Bank. The bond counseling services of Moore Smith Buxton & Turcke, Chartered will cost $7,500.
A second agreement is for Financial Advisory Services with Zions Bank Public Finance which is a division of Zions First National Bank. The agreement states that for a fee of $5,000 Zions will provide expert financial advice and assistance on the issuance and sale of city securities, make recommendations as to fees, payment and security details and bond specifications most advantageous to the city. Zions will be working in conjunction with Moore Smith Buxton & Turcke.
City Administrator George Ambrose, with compliments to Fealko, told the council the financial arrangement to refinance the 40 year bond is a huge move for the city and a wise use of funds.
Fealko in turn praised Cameron Aerial, Vice President of Zions Bank Public Financing, for all the detailed paperwork and preliminary legwork required to make the financial move possible.
The roll call votes by the City Council were unanimously in favor of each agreement.
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