Refinancing expected to save county $1.9 million |

Refinancing expected to save county $1.9 million

Nevada County government has taken the route chosen by many homeowners and refinanced its debt to take advantage of historic low interest rates.

County officials say they will save a total of $1.9 million, or an average of $120,000 a year through 2019, by refinancing certificates of participation issued to raise money for buildings and improvements.

“The reason why payments are so much lower is, interest rates are so much lower,” said Michael Castelli, special counsel to the County Counsel’s Office. Castelli is a former bond attorney who worked on the refinancing with county administrators and the Treasurer’s Office.

A total of $27.4 million in certificates were obtained in 1991 and 1993 to refinance Wayne Brown Correctional Facility and Rood Administrative Center and to pay for a number of smaller capital improvement projects. Some $6 million of the debt was paid down in the last decade.

The county converted the 1991 and 1993 certificates to $21.4 million in new 2001 series certificates that locked in low interest rates on Nov. 27. The deal with investment banking firm Morgan Stanley was completed Dec. 11.

The new certificates have an average coupon, or interest rate, of 4.54 percent, down from the previous average of 5.84 percent.

As part of the refinancing, the old juvenile hall, airport and animal shelter are no longer considered collateral on the county’s debt. Rood Center and the jail are now collateral.

Supervisor Peter Van Zant said the refinancing came out of last year’s budgeting talks. During that time, the county challenged its staff to come up with ways to better manage its long-term debt.

“This is the first major outcome,” Van Zant said.

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