Refinancing trims Shelby Co. debt

Savings of $48M on shorter loan, lower rate

Shelby County will shave $48 million off its debt through a refinancing plan that lowers the county’s interest rate and reduces the length of the loan.

It will save the county money, but officials say as budget season approaches, how those savings are managed will need to be weighed against a growing inven- tory of county needs.

Overall, the county replaced a $118 million bond at 4.66 percent interest with a $70 million bond at 1.6 percent, saving about $48 million in debt, said Mike Swift, county finance director.

The previous bonds were to have been paid off by 2030, but will now be paid off in 2027, Swift said

“Now that’s a pretty good deal,” he said.

In November, the County Commission approved Swift’s plan to refinance as much as $278 million in debt, but adjustments were made due to market changes, said Swift, who advised the commission that the plan had been executed in January.

“Shelby County has adapted to this new economy,” said Commissioner Melvin Burgess, audit committee chairman.

Restructuring the debt keeps the county financially sound and maintains its bond rating, he said.

However, with the county’s budget season weeks away, the savings shouldn’t be seen as a windfall that justifies a property tax cut, said Commissioner Van Turner, budget committee chairman.

“I think it’s great that the interest rates have been reduced and we’ve saved so much money,” Turner said. “But I believe right now we have to still continue to look at what the needs may be in the county as it relates to blight, education and fighting crime.”

Shelby County Schools has already projected a $72 million deficit for the next budget year, and there is the ever-looming $1.5 billion OPEB (other post-employment benefits) obligation for school system retirees that has not yet been addressed.

An ad hoc committee made up of county and school system officials has been convened to tackle that problem.

“I’m all in favor of reducing the tax burden for our citizens in Shelby County, for business owners in Shelby County, but we cannot do that and ignore real financial issues that are also before us,” Turner said.