Denton County is $5 million less in debt thanks to some timely refinancing of bond debt.
With interest rates low and the county’s bond rating high, officials saw an opportunity to refinance and gain greater savings than in past years.
James Wells, the county’s auditor, said the refinancing cost the county nothing.
Commissioners voted on the refinancing a few weeks ago and the process was completed in recent days. Bond refinancing is analogous to homeowners refinancing their mortgage to take advantage of better rates, Wells said.
He said the county had bonds from 2005 to 2006 that were issued at a much higher rate.
“We saved almost $5 million in real money, and the rates for the new money we have had to borrow is extremely low,” Wells said.
He said the county sold new bonds to help pay off the old ones, replacing old expensive debt with newer, cheaper debt.
The county has refinanced about seven times in the last few years and ordinarily saved $1 million or $2 million.
In order for officials to approve the process, it has to meet certain parameters set by Wells and Southwest Securities, a financial advisory firm the county has used for more than 10 years.
Wells said the rates are affected by a couple of things — rates set by the federal government that constrains rates and the county’s bond rating.
“Our bonds are considered very attractive investments,” he said. “We have the highest bond rating possible, AAA. Our finances are strong and that makes Denton County bonds a very attractive investment for people who want to hold local government debt.”
Wells said investors are willing to get less interest from the county because it is such a low risk.
Wells said county officials handled refinancing bonds, notes and refunding altogether in one transaction versus multiple ones, which also saved the county many thousands of dollars.
The new bonds will help to keep some of the county’s current building projects, such as the jail expansion, a government building in Frisco, technology improvements and road projects approved by voters in 2008.
County Judge Mary Horn said that if there was anything good to be said about the state of the economy, it allows the county to get better interest rates, which is vital to getting projects done.
“Any time we can save 5 million taxpayer dollars, that has my attention,” she said.
BJ LEWIS can be reached at 940-566-6875 and viaTwitter @BjlewisDRC.