TITLE: Title
Re-financing of Fire Station Construction Loan
PURPOSE: To consider a proposal from BB&T to modify the interest rate for the Town's Fire Station Construction Loan
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DEPARTMENT: Finance
CONTACT INFORMATION: Arche McAdoo, 918-7439
INFORMATION: On July 1, 2009 the Town entered into an installment financing agreement with Branch Banking and Trust (BB&T) to borrow $3,250,000 for the construction of a new fire station in the northern area of Town. The term of this financing was 4.07% interest for 15 years with semi-annual payments. With assistance from First Tryon financial advisors, we have explored the market place to see if the Town could re-finance the balance of this loan at a rate lower than 4.07%. To do a formal RFP to refinance the balance of this loan would require additional upfront costs and time as well as the formal approval of the Local Government Commission. Based on contact with several financial institutions, the current market rate for this type of loan appears to be in the 1.75 - 2.75% range. However, there is no guarantee that the Town would receive a formal bid at the low end of this range if the Town were to issue a RFP for refinancing.
During this process we also requested a rate modification from BB&T. BB&T has offered the Town a rate modification of 2.59% (see Attachment B). This will save the Town approximately $117,000 over the remaining life of the loan.
FY Ending (6/30)
BB&T Existing Rate @ 4.07%
BB&T New Rate @ 2.59%
2017
289,418
262,963
2018
280,600
257,351
2019
271,781
251,740
2020
262,963
246,128
2021
254,145
240,516
2022
245,326
234,905
2023
236,508
229,293
2024
227,690
223,681
2025
110,538
109,736
Total Debt Service
2,178,968
2...
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