The Metro Utility Department successfully renegotiated a set of loans this month to help reduce debt within the department by decreasing the interest rate of the loans.
At last month’s Metropolitan Lynchburg Moore County Council meeting, utility department manager Rick Garland addressed the council and asked for approval to accept a bid from Farmer’s Bank which would help reduce debt and cut nearly two decades off the length of the loans.
“Three sealed bids in regards to four of the utility department’s rural development loans were opened (on Jan. 8),” said Garland.
Bids were submitted by the State Loan Pool, Lynchburg Bank and Farmer’s Bank.
Garland reported that the bid by Farmer’s Bank at 2.45 percent was the lowest. The bid from the State Loan Pool was 3.23, while the bid from Lynchburg Bank was 2.64.
Garland told the council that the utility board was currently paying an average rate of 4.79 percent on the loans. He added that on Jan. 12 the Utility Board voted to accept the bid of Farmer’s Bank, which is an affiliate of American City Bank.
By refinancing the loans, Garland said it will shorten the life of the loans by 18 years.
“The new loan will be paid in full in 2027,” said Garland. “The difference in the interest rate (from 4.79 to 2.45) is 2.34 (percent). The total interest saved over the life of the loan will be $113,496.13.”
Garland asked the council to ratify debt issue and accept the loan from Farmer’s Bank refinancing a total of $696,691.37.
Marty Copeland made the motion to accept the proposal from the utility department and Tommy Brown seconded it.
The motion was approved unanimously via a roll-call vote.
—By ROBERT HOLMAN, Editor & Publisher (firstname.lastname@example.org)
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