Bond refinancing to save City of Cedartown $400K on interest costs

The City of Cedartown will get to save some cash by the time that all of the bonds sold in recent years are completely paid off.

A timely lock-in on Oct. 7 before rates began to climb again allowed the City of Cedartown to get a decrease from above 2.7% interest down more than a percentage point with a new deal in place through Stifel, Nicolaus & Company.

Andrew Tritt, who came to represent the firm, explained the City of Cedartown was able to get one great deal in the process.

“It was at really a low point for all of 2019,” Tritt said. “We’re in a volatile market with everything that has been impacting rates... The good news is that you were originally at a rate of 2.77%, and we were able to bring that to a lower, tax exempt rate of 1.67%. That creates a net savings of $400,000.”

On average, Tritt said that was around $30,000 a year in savings in the payments made back to bond holders, which will increase annually from $354,772 with the bond refinancing completed in 2020, to $671,022 when the last payment is made in 2033.

Commissioners approved the new bond refinancing plan unanimously during their October 14 regular meeting

after they were able to lock in rates during their Oct. 7 work session. The city initially purchased the bonds in 2013 to complete sewer lift station work on the new line out to Floyd Polk Medical Center on Highway 27, as well as complete the Asberry lift station replacement.

City Manager Bill Fann said a refinancing deal in 2017 allowed the city to saved more than $200,000 in the process, which now brings a total savings of more than $600,000 on the pair of deals.

The second round of bond refinancing on the bonds for the lift station came just in time, as the bond market in recent days moved back upward toward the 2% mark again according to information provided by Tritt.

Commissioners gave praise to Tritt and his firm for their due diligence in bringing down costs for the city’s repayment of the bonds.

“I want to thank you for doing a heck of a job here,” Commission Chair Matt Foster said.

He later added “the fruits of your labor are certainly appreciated.”

Fann had additional good news about savings during the meeting, reporting back that their health care provider Cigna once again lowered the cost of the city’s insurance premium for the year, resulting in a 1.1% decrease for the upcoming year. He said it marked a more than 4% decrease in health care costs for the city over the past two years.

The news came as the city continues to get ready for the 2020 fiscal year beginning of January 1, 2020, and is set to be approved in December ahead of year’s end.