Sarah Fay Campbell/The Newnan Times-Herald
Bill Camp of Raymond James speaks to the Senoia City Council about the bond sale.
The City of Senoia has successfully sold bonds to refinance existing debt, and the city is moving forward with the creation of its own public amenities authority to fund future projects.
The city issues $5.2 million in bonds to pay off existing bond debt. Since the new bonds are at a lower rate, the city will save $881,000 over the 20-year term of the bonds. The bond sale took place last week and will close on January 27.
These bonds are revenue bonds, which will be paid with revenue from the city’s water and sewer service.
By creating a public amenities authority, the city will be able to use bond financing for future projects that do not generate revenue, such as a potential new municipal complex.
In a called meeting, the council voted to approve a bond resolution, as well as to approve the formation of the City of Senoia Buildings and Facilities Authority.
The council approved a resolution requesting “local legislation” from the Georgia General Assembly to create the authority. State Senator Matt Brass and State Representative Josh Bonner will lead the legislation for the city.
Coweta County created its own Public Facilities Authority in 2021. This authority can issue bonds not only for county projects, but also for projects for municipalities in the county.
But Senoia decided to create its own authority rather than using the Coweta Public Facilities Authority.
“We kind of want to do our own thing,” City Attorney Drew Whalen said. “The county spoke to us and made an offer. We preferred to do it ourselves.”
Legislation creating the new authority is expected to come into force no later than July 1. “Then we can explore funding opportunities,” Whalen said. And by then, Whalen said, the city will hopefully have a clear idea of what projects it wants to pursue.
The city had a successful day in the bond market, said Bill Camp of Raymond James. “This is the first week we’ve seen bond issuance in the state for 2022, so you have no competition,” Camp told the board. Rates started to rise, so Camp said he was very happy the bonds were priced when they were.
With the costs added, the interest rate on the bonds will be 2.64%. The debt that’s being refinanced is over 4%, Camp said.
While the savings over the life of the bonds are $881,000, the “net present value” is $818,000. Using this, the savings from reimbursement is around 17%.
“We normally tell people that 3% savings is a good refund,” Camp said.
Camp said they are also purchasing a bond policy which secures the bonds as well as the required reserve. This means that the municipal reserve of $552,000 in the water and sewer fund can be used for other projects.
Whalen said the recommendation is that the city hold onto that money for now and see how the Keg Creek sewer plant project goes.
“Sewer projects are notorious for cost overruns,” he said. “We may need it later.”