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Nash Farm loan refinanced for $226K savings

 

By Monroe Roark
Times Correspondent
 

  The Henry County Board of Commissioners voted last week on a refinancing deal that will save the county nearly $40,000 per year between now and the middle of 2020, when the Nash Farm property is paid off.

  The agreement with the current lender, De Lage Landen Public Finance LLC, will see the interest rate on the installment sale agreement drop from its current 4.42 percent to 2.75 percent effective Nov. 1, when the first payment under the new rate is due.

  That means a reduction of about $3,327 from the current monthly payment of $73,577.84 under the original agreement, which began July 1, 2008 and runs through June 1 2020. That comes out to $39,927 per year, and the total savings over 68 months will amount to $226,258.04.

  The refinancing does not change the amortization schedule, a fact that District II Commissioner Brian Preston reiterated after county finance director Fred Auletta’s presentation of the proposal.

  Rather than have the life of the loan extended as often happens when a 15-year or 30-year home loan is refinanced, in this case the loan will be paid off at the same time as originally planned, Preston pointed out.

  Auletta said his office looked at another proposal which would have kept the monthly payments the same but ended the payment schedule a couple of years earlier. He recommended the lower payment which would put money back into the county’s coffers immediately.

  After acquiring the 192-acre Nash Farm property, the county sold it to the Association of County Commissioners Georgia (ACCG) in May of 2008 for $8,208,200. The ACCG then sold it back to the county and assigned the ISA to DLL as the lender.

  The county approached DLL recently about possible refinancing options, Auletta said, and DLL came back with the 2.75-percent proposal.

  There will be no fees or expenses to the county from the refinancing, but the county will be responsible for its own legal/advisor fees, according to Auletta, who added that the county’s bond counsel expects those costs to be below $15,000.

  After receiving the DLL proposal, the county gave two local banks – Heritage and United Community – the opportunity to compete for the business, along with SunTrust, the county’s current bank.

  Neither Heritage nor United Community has an “appetite for tax-exempt lending,” said Auletta. Heritage offered a 4.35-percent rate while United Community’s proposal was 3.42 percent, both of which were far above DLL’s new rate.

   SunTrust came up with a 1.79-percent offer that would have saved another $127,100 but could not complete the same financing agreement, so the bank proposed that the Henry County Develop-ment Authority be the borrower supported by an intergovernmental contract. The main difference is that this loan would be come with a full faith and credit pledge of the county, whereas the DLL agreement is only collateralized by the land itself.

   Auletta said that, according to the county’s bond counsel, this financing would not be appropriate because of the “unique constitutional and statutory provisions that limit the projects and parties that it may provide financing for.”

  SunTrust spent the last couple of weeks trying to come up with another plan but could not, Auletta added.

  County staff recommended the DLL proposal and that it be ready to close by Oct. 1, with formal acceptance no later than Sept. 21 to meet the 60-day condition of acceptance before DLL’s July 24 offer becomes null and void.

  The proposal was approved 6-0.

 

 

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