LaFAYETTE, Ga. -- LaFayette is looking at saving $714,113 by refinancing loans it took out for water and sewer projects -- and likely will use the savings to help fund a $2.25 million sewage plant upgrade, officials said.
The city has three loans at slightly above a 4 percent interest rate from the Georgia Environmental Finance Authority on which it owes a total of about $9.2 million. Merchant Capital, which has offices in Atlanta and Montgomery, Ala., is willing to refinance the loans at 2.5 percent, which would reduce the city's total payment to about $8.5 million for a $714,113 savings.
The City Council voted in favor of having Merchant Capital representatives come back at council's Nov. 12 meeting with more precise figures for refinancing the debt.
"That was a pretty easy decision," City Councilman Andy Arnold said. "I wish they were all that easy."
City Manager Frank Etheridge said the calculations are based on the city getting an "A" bond rating, and the city could do even better if it gets an "AA" or higher bond rating.
What city officials also are trying to decide is whether it makes sense to have Merchant Capital refinance the loans and also finance a $2.25 million upgrade to improve phosphorous removal at the sewage plant.
"We have to do the project," Etheridge said of the sewage plant work. "The state's pushing for it."
The sewage plant upgrade likely won't prompt a rate increase, he said.
The city also will see whether it can get a better deal refinancing its loan and paying for the sewage plant upgrades through the Georgia Environmental Finance Authority instead of Merchant Capital, Etheridge said.
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Tim Omarzu covers education for the Times Free Press. Omarzu is a longtime journalist who has worked as a reporter and editor at daily and weekly newspapers in Michigan, Nevada and California.