Interest rate on Fibrant debt could be lower than expected
Published 12:00 am Friday, May 25, 2018
SALISBURY — Within 10 minutes Thursday afternoon, the Salisbury City Council adopted two resolutions that could mean a lower interest rate than previously projected for the city’s remaining Fibrant debt.
A CTC Technology and Energy report presented to the council in April projected that the interest on the city’s refinanced debt could be as high as $500,000.
At the rate the city’s financial adviser — Stephens Inc. — was able to lock in with First Bank, the interest payment would be closer to $278,000.
One of the conditions of the Fibrant-Hotwire Communications lease — which was approved in a May 8 referendum — is that the city must refinance its remaining Fibrant debt to make it taxable rather than tax-exempt.
That change is necessary because the city has entered into a public-private partnership with Hotwire, a private company, and will no longer run Fibrant as a city service.
Finance Director Shannon Moore said Stephens Inc. sent a request for proposals to 19 banks in April and received four complete responses.
She said First Bank’s offered the lowest interest rate at 3.84 percent.
Moore said the city’s current rate is 2.06 percent.
City Manager Lane Bailey said that although the new rate is more than the current rate, it is still better than the rate the city had before 2016.
Mayor Pro Tem David Post said at last week’s City Council meeting that the rate between 2013 and 2016 was 5.85 percent.
“So even after the refinancing here, we’re still more than 2 percent below where we were two years ago,” Post said at last Tuesday’s meeting.
Stephens representative Richard Marvin also said at last Tuesday’s meeting that the refinanced deal would allow the city to avoid a “pre-payment penalty” if the lease fell through before the debt’s maturation date of 2029.
Contact reporter Jessica Coates at 704-797-4222.