County taxpayers have paid $436,550 in prepayment penalties on bonds for new county facilities, Auditor Tammy Vemmer said Thursday.
She said the prepayment penalties are related to a 2007 and 2008 series of bonds for county projects.
The county paid off the 2007 and 2008 series a year early, which resulted in the prepayment penalties, Vemmer said.
The prepayment penalty was $174,050 on the 2007 series and $262,500 on the 2008 series, according to county documents.
Presiding Commissioner John Griesheimer said the commissioners paid off the bonds early because they were worried about rising interest rates.
Even with the prepayment penalties, the county still saw an economic gain of $2.6 million by refinancing the bonds, according to the county’s comprehensive annual financial report.
Vemmer said the savings may have been more if the county had not paid the prepayment penalties, but that would have depended on changes to the interest rate.
Determining whether the county would have been better off by waiting to pay off the bonds would require an analysis of changes in the interest rates, Vemmer said.
Griesheimer and former Commissioners Ann Schroeder and Terry Wilson signed an escrow trust agreement dated Sept. 1, 2012 agreeing to the prepayment penalties.
The county paid off the 2007 and 2008 series as part of a process to refinance $39.2 million in bonds to get a better interest rate.
When the county went through the refinancing process in 2012, the 2005 series of bonds were paid off without a prepayment penalty, Vemmer said.
But that was not the case with the 2007 and 2008 series. They could not be paid off without a prepayment penalty until 2014 for the 2007 series and 2015 for the 2008 series.
The money to pay off the 2007 series came out of a Bank of New York irrevocable trust this year, according to Vemmer. The money to pay off the 2008 series is scheduled to come out of the trust in 2014, she added.
Griesheimer was upset that the county continues to get criticized over how it handled the bonds. The county tried to reduce expenses and was still criticized, he said.
If the county had not refinanced, it would have a harder time paying off the facilities, he 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.
The county will be done paying of the bonds in April 2032.