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3 <br /> placement of the refunding bond (refinancing the <br /> loan) . <br /> - The staff has begun preliminary talks with <br /> several banks who have handled FmHA refinancings <br /> in the past. <br /> In deciding whether the County should participate in the <br /> Discount Purchase program, we should first consider whether <br /> we will be eligible for the program. If we are eligible, <br /> then we must determine if buying out our loan is financially <br /> favorable for the County. <br /> Eligibility <br /> There is some question about our eligibility for the program <br /> because our project is not yet closed out. In order to <br /> participate in the buy-back program, all jurisdictions must <br /> have closed out all phases of construction, payment, <br /> inspection, and other approvals of the project by May 9. <br /> The deadline for applying for the program and paying the <br /> "good faith" deposit of approximately $6,000 is March 9. It <br /> is unlikely that the project will be closed out by March 9. <br /> Therefore, before March 9, we will have to decide whether it <br /> is wise to proceed with the program and the good faith <br /> deposit. We do not anticipate any problems with the close- <br /> out of the project which would prohibit us from participating <br /> in the program. <br /> If we do pay the good faith deposit, and the project is not <br /> closed out by May 9, we will not lose our deposit, but it <br /> will be applied to the principal of our loan and will not be <br /> refunded to us before the our loan is completely paid out. <br /> Our loan payments are scheduled through FY 2027, so we will <br /> not see the benefit from the $6,000 for many years. <br /> Analysis of Financial Feasibility <br /> 1) Buy-back without refinancing with bank <br /> The County may choose to simply buy out the loan with <br /> current reserves. it is very likely that this will be <br /> the option which can save the County the most money. <br /> We will have the opportunity to buy our loan at a 40% <br /> discount. This would save the County approximately <br /> $80,000 in principal payments. <br /> The only drawback of this approach is that we would have <br /> to pay $120,000 in a lump sum this fiscal year. If we <br /> stay with our current loan with FmHA, our payment this <br /> year would be $12,750. Future annual loan payments would <br />