Presiding County Commissioner John Griesheimer disagrees with how a Missourian story portrayed savings the county realized from refinancing bonds for county facilities.
The newspaper’s story, which cited county documents, was accurate but did not specifically mention that the county decreased its debt service payments by $3,583,084 over a 20-year period.
Griesheimer said the Sept. 7 article, which was headlined “Taxpayers Hit With Over $430,000 in Bond Prepayment Penalties,” did not tell the whole story.
Specifically, Griesheimer took issue with a sentence in the news story that stated, “Even with the prepayment penalties, the county still saw an economic gain of $2.6 million by refinancing the Certificates of Participation (COPs), or bonds, according to the county’s comprehensive annual financial report.”
Griesheimer said the county actually saved $3.6 million in “cash” on refinancing the bonds.
However, The Missourian’s news story quoted the “present value” savings, which is $2.6 million.
Griesheimer said he does not “go by” the “present value” figures.
“I don’t go by these other figures” that economists may use, Griesheimer said.
“In actual cash money what we’re going to pay out over the life of the loan, we’ve saved $3.6 million of taxpayer money,” Griesheimer said. “That’s actual money saved in not having to pay the additional principal and interest.”
While the county saved $3.6 million in cash on the refinancing, that is only $2.6 million in “present value” savings. That means the $3.6 million the county saved will only be worth $2.6 million when the bonds are paid off in 2032, he said.
While some people may look at the present value savings, Griesheimer said he looks at it another way.
“That may be how they do it; I look at cold, hard cash,” Griesheimer said. “And that’s exactly what that $3.6 million is.”
Griesheimer said he just wants to make it clear to the public that refinancing the bonds was a good choice that saved the county $3.6 million in cash.
Moreover, Griesheimer said paying the $436,550 in prepayment penalties was necessary to achieve the larger savings of $3.6 million.
The county had to pay prepayment penalties on the 2007 and 2008 series of bonds because they were each paid off a year early. Griesheimer said the county could not wait to pay off the bonds because interest rates were going up. The 2007 and 2008 bonds needed to be paid off early to lock in a low-interest rate in the refinancing, he said.
He said he is “very proud” that the county refinanced and saved the money.
“We did get a significant savings by doing it,” he said. “We did exactly the right thing.”
Griesheimer said he was concerned that The
Missourian’s story on the prepayment penalties made it look as though the county wasted money. But in fact the refinancing lowered the county’s payments, Griesheimer said.
The 2005 series of bonds was for the new county government center; the 2007 series was for the new judicial center and the Pave the County program; and the 2008 series was for Pave the County, the historic courthouse renovation and the sheriff’s office heating and air-conditioning project.