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4 <br /> be approximately $14,000. Thus, although we would <br /> eventually save money, this option would have an <br /> immediate negative impact on this year's budget. <br /> By using funds we expect will be left over after the <br /> completion of the Efland sewer project (possibly as much <br /> as $50,000) and/or using the part of the reserve we set <br /> aside in this year's budget for payment of debt service <br /> on our new bond issue, we can raise the $120,000 needed <br /> to buy back our loan. However, we must realize that this <br /> $120,000 will not be available for use on other CIP <br /> projects this year or in the next several years. <br /> 2) Refinancing loan with Bank <br /> This option is not likely to save the County as much <br /> money in the long run, but will minimize the effect on <br /> the County's budget in the short run. With approval by <br /> the LGC and the willingness of a local bank, we will be <br /> able to buy back our loan at a discount from FmHA and <br /> refinance the discounted amount. <br /> We must assume that the refinancing will be at a <br /> significantly higher interest rate. The refunding bond <br /> will not be tax-exempt. <br /> The major drawback to this option is that we will incur <br /> overhead costs of approximately $6,000 for bond counsel <br /> and publication costs. Significant staff time will also <br /> be required to complete the refinancing. <br /> We believe that we can arrange terms which will allow us <br /> to pay back the refinanced loan with annual payments of <br /> approximately $15,000 to $18,000. Information will be <br /> available in the next several weeks which will tell us <br /> whether this option will be feasible. <br /> Recommendation <br /> The staff recommends that the County start the formal <br /> proceedings for a bond authorization, so that the option of <br /> refinancing the loan is not closed off to us. It appears at <br /> this time that the County will be eligible to participate in <br /> the discount purchase program and that it will be in our best <br /> financial interest to do so. <br /> The staff has already submitted a preliminary application to <br /> the Local Government Commission as required. This <br /> application is not binding in any way, but again keeps all <br /> options open to us. <br /> We recommend that the County delay the final decision on <br /> whether to participate and if so, whether to refinance until <br /> the March 8 Board of County Commissioners meeting. <br />