MOUNT VERNON — To take advantage of the slump in interest rates, the Knox County Board of Commissioners recently looked into refinancing some government bonds. The bonds, originally arranged when interest rates were higher, were sold around 10 years ago to fund construction and renovation of county business facilities.
Shortly after the county secured a stable bond rating from the markets in New York City, it looked like the county would end up saving $225,000 over the continued periods of the bonds, which are another 10 years in most cases. But the values on the bond market took a sharp drop a few weeks ago, which would have lowered the county’s savings to $130,000.
Then the Wall Street firm Goldman Sachs came under heavy fire from the federal government for its role in the recent recession. This sent the bond market soaring, as investors retreated into bonds, which are typically regarded as “sure bets” in the financial markets.
With the new bond market levels, the commissioners gave the project the go-ahead in order to capture some extra savings. To everyone’s surprise, the final net savings ended up being $259,000.
Two of the three bonds refinanced involve the Knox County Department of Job & Family Services. Director Matthew Kurtz said these savings are especially welcome in light of the state cuts the DJFS has weathered in the last two state budgets. He added that it’s good to scale back these costs now, as future state budgets will also have to find a way to patch the gap currently being covered by federal stimulus funds, which will disappear by 2012.
Kurtz said another welcome feature of these savings is that they are calculated on loan interest being repaid over the period of the bond. This means the largest year of savings is right now, with the savings dropping as the interest cost goes down over the years as the loan is paid back.
Kurtz said the Children’s Resource Center was originally constructed with the proceeds from a $1.2 million bond. The remaining $675,000 of the bond was refinanced, leading to $45,537 in savings, $22,839 of which will be taken this year.
Renovation of the upper floors of the Knox County Service Center on East High Street was bonded at $2.45 million originally, with $1.27 million remaining to refinance, leading to a net savings of $112,761. The total savings for DJFS is $158,298, unless the commissioners choose not to recoup the costs of legal fees, bond rating fees and public financing company fees, which would boost the department’s gross savings to $225,783.
The remaining bonds refinanced were for 1997 and 2000 projects, including the construction of the sheriff’s office and jail complex, and the board of health building.
In other business, the commissioners met with Dr. Randie Timpe of Mount Vernon who was recommended for a seat on the Community Mental Health and Recovery Board by executive director Wendy Williams. Timpe is assistant to the president for Strategic Planning and Director of Institutional Effectiveness at Mount Vernon Nazarene University, and has a background and education in psychology, sociology, administration and strategic planning.
Timpe was approved by the commissioners for a term beginning in June 2010 through 2014. Timpe will replace Dr. David Kale, who is retiring and will not be available for a second term.