FROM STAFF REPORTS

MONTEVALLO – The Montevallo Water Works and Sewer Board of the city of Montevallo recently approved a refinancing of its 2001 bond issue.

The original bond issue amount was $2.8 million with an interest rate of 4.9 percent, and the new issue is for $2.9 million with an interest rate of 2.32 percent. The net reduction in debt load will be more than $500,000, according to System Manager Michael Harmon.

The board’s financial and management position allowed it to obtain a first-time rating of “AA” from Standard and Poor’s credit rating agency, and this credit affirmation enabled the refinancing despite an environment of troubled municipal financing elsewhere, according to Harmon.

By obtaining and maintaining this “AA” credit rating, the board will be able to provide lower cost financings and increased savings for its customers through lower interest rates if future financings become necessary. The board has no plans for additional debt at this time, Harmon wrote in a press release.

Harmon said this is a “win-win situation for the board and its customers. The AA rating will be a benefit for the system in the future should additional borrowing become necessary.”

Merchant Capital, LLC was selected by the board to handle this transaction with John Wilson as the lead banker, according to Harmon.