SWAINTON — During a nine-minute meeting Feb. 18, Cape May County Municipal Utilities Authority (CMCMUA) saved a total of about $220,000 in debt service payments by refinancing a $4.8 million bond in its last four years of repayment.
This equates to a $55,000 savings per year, a net savings of 3.48 percent.
Bonds were reworked from 4.9 percent to a rate of 3.6 percent. Some coupons were split between 4 percent and 2.25 percent.
Executive Director Charles Norkis said CMCMUA didn’t assume any of the risk if the refinance didn’t go through as consultants worked on it without the promise of pay.
“Consultants went out on a limb and prepared a lot of work,” he said.
Often it can be expensive and risky to refinance, particularly with a fluctuating economy, and consultant costs were $100,000, Norkis said.
The authority is limited in its ability to refinance in order to maintain tax-exempt status. Department of Community Affairs (DCA) requires at least a net 3 percent savings in order for the authority to refinance bonds.
“It’s not a tremendous savings but every bit helps. Our revenue has significantly decreased from just a few years ago. We’ve lost about $6 million. There’s less solid waste tonnage, normal household waste has decreased and construction is down,” Norkis said.
“Any way we can save money, we want to do that and that’s reflected in this savings.”
Savings were probably closer to $300,000, Norkis said, but was reduced after consulting fees. He said the savings were a result of efforts on part of the authority’s bond counsel, underwriter and Acacia Financial of Morristown Pa.
“This small bond issue is significant because of the state of the economy today. It’s exciting for today’s climate,” Vice-Chairman John Pantalone said.
Contact Truluck at: ltruluck@cmcherald.com
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