The Liberty County Board of Commissioners recently approved refinancing for bond debt on MidCoast Regional Airport at Wright Army Airfield, a move that will allow the savings to go toward paying off the airport runway extension project.
The commissioners approved a motion to have Ameris Bank refinance two bonds — one taxable and the other tax-exempt — for MidCoast Regional at a meeting earlier this month, but discussed reasons for the refinancing at their planning workshop in January, held at the airport.
At the workshop, County Administrator Joey Brown and county Chief Financial Officer Kim McGlothlin presented information about refinancing the bond and advance refunding of the tax-exempt bond. Brown said the taxable bond was in a callable state, meaning that the debt can be refinanced at a lower interest rate. McGlothlin said advance refunding means that bonds are not yet callable however, interest rates have dropped so low that a penalty may be incurred, but the savings will more than compensate for the penalty.
The taxable bond, for $1.34 million, had an annual interest rate of 6 percent until 2039. McGlothlin said the life of the bond will not be extended and that the interest rate could be reset from 6 percent to 3.95 percent. At a 6 percent rate, the county would pay $729,551.56 in total interest. Refinancing at 3.95 percent will instead cost $430,133, saving the county about $300,000, McGlothlin said.
The tax-exempt bond of $2.86 million had an annual interest rate of 4.42 percent until 2029. McGlothlin said this bond can go through advance refunding for a lower interest rate at 2.49 percent. She said the interest collected would decrease from $1,115,366.34 to $603,807.
“Collectively, that is about a million dollars in savings,” McGlothlin said.
Brown added that the savings is over 15 years and would be split three ways between the county, Liberty County Development Authority and the city of Hinesville. In May, the three entities entered a partnership to each pay $46,233 per year for 20 years to pay off $3.1 million debt for the runway extension. At that time, the interest rate was 2.7 percent and was lowered to 2.49 percent.
McGlothlin said that refinancing and advance refunding “ will also give us a little bit of relief up front over the next couple of years.”
Commissioners Chairman Donald Lovette said at the workshop that refinancing the bonds allows the county to save money now and possibly more in the future.
Brown said in an email that the taxable bonds apply to the section of the airfield leased to the military and tax-exempt bonds apply to joint-use areas like the runway. Facilities at the airport, such as the hangar, which rents space for planes, are taxable.
“Bad news is, a little higher interest rate for taxable,” he said. “The good news is when that’s paid off, what we’re receiving on rent will be clear and free money that the three partners will split to go back in the operational budget.”
The total runway project cost is $13.7 million. Additional funds from the Federal Aviation Administration ($1.7 million) and the Georgia Department of Transportation ($8.9 million) are going toward the extension.
Bonds for the Liberty County Justice Center and Hinesville City Hall were briefly mentioned during discussions about the airport debt. Brown said the $17.2 million Justice Center bond will be callable next year. The bond for Hinesville City Hall and the city’s Public Works building was refinanced last year to $5.5 million from $9.5 million, for a savings of about $4 million.