By SARAH CAMPBELL
Leader staff writer
Sherwood could save around $4,000 a month — $48,000 a year and more than $1 million in total interest costs — if the city refinances the $6.1 million loan it took out to purchase The Greens at North Hills Golf Course.
Mayor Virginia Young told The Leader that after Jack Truemper of Stephens Inc. presented two options to the Sherwood Public Facilities Board at last week’s meeting.
The board didn’t vote on either one, but agreed to continue looking into the refinancing.
Truemper said the current loan should be closed in January and that bonds for the refinancing could be sold after Thanksgiving — 40 to 50 days before the closing.
The first option would reduce the city’s varying interest rate from between 3 percent and 5 percent to between 2 percent and 3.75 percent.
He said that would save Sherwood about $50,000 a year and $1.29 million over the loan term. The city would pay more than 10 percent less in that scenario, Truemper noted.
The second option would mean an interest rate between 2 percent and 4 percent.
Truemper said it would save the city $45,000 to $49,000 a year and a total of $1.17 million, or 8.65 percent.
The projects are based on interest rates continuing to trend slightly downward, or remain flat, he noted.
Truemper also told the board that the refinancing would not affect the $6 million library bond issue the mayor said would be funded this year through the 1.3-mill increase voters passed in November.
“There’s clearly an opportunity to save money based on the present market,” Truemper said, adding that one advantage is the low supply of bank-qualified bonds and high demand for them.
Both options are bank-qualified bond issues, “which means the city would not issue over $10 million dollars worth of bonds in a calendar year,” he continued.
The first option would involve a credit rating. Truemper estimated that Sherwood would be working with an A-plus credit rating because that was the rating for Benton and Conway in similar financing situations.
The second option would not make use of the credit rating.
Truemper also told the board members that all prices for the refinancing would be given in advance. The first bond could not be sold without their approval and signatures, he emphasized.
The mayor remarked at the end of his presentation that the figures Truemper quoted were almost three years’ worth of savings.
She also asked if Stephens Inc. would cut the city a deal for remaining a customer should they use the firm to facilitate the refinancing.
Truemper responded that a fair fee would be negotiated if the loan were refinanced, but warned that there are other costs for entities that would have to be involved, such as a bond attorney.
