DECATUR, Ind. — The Adams County Council is considering a plan to refinance nearly $9.5 million in outstanding debt from a 2015 jail construction project, a move financial advisors say could lower interest rates and reduce annual payments.
During a Tuesday morning meeting, the council reviewed a proposal to restructure $9,450,000 in principal outstanding on the county jail bonds. Jason Semler, a financial consultant representing Baker Tilly, told council members that while market rates have fluctuated recently, there is still a “potential benefit” to refinancing now rather than waiting.
The current bonds carry interest rates ranging from 3.25% to 3.87%. The proposed refinancing targets a rate of approximately 3%.
To achieve the most favorable terms, the plan involves utilizing roughly $1.6 million from the county’s debt service and operation reserve accounts. By applying that cash to “buy down” the principal, the county would only need to borrow approximately $7.4 million in the new bond issue.
“You’re getting true apples to apples,” Semler said during the presentation. “You are getting a lower interest rate and you’re able to use some of that [cash] that’s just sitting there to start paying this out and get the ball rolling.”
Semler estimated the move could result in a net present value savings of about $24,000 based on current market conditions. However, council members noted that the primary advantage would be the reduction of annual debt service payments, which could drop by as much as $200,000 per year due to the infusion of cash reserves.
The council took no formal action on Tuesday, treating the presentation as informational. Any move to proceed with the refinancing would require a coordinated approval process with the Adams County Commissioners and a formal timetable established by bond counsel.
If authorized, the closing on the new bonds could take place as early as mid-July.