In a proposed deal that would save Elbert County taxpayers an estimated $1.7 million, the Board of County Commissioners (BOCC) unanimously passed a resolution designating Branch Banking and Trust (BB&T) as the financial entity to refinance $5.8 million of debt owed by the county.
“The purpose of this action today is to select a financing institution to pursue this, and there will be a follow on action to actually consummate the deal,” said Commissioner Larry Ross at the BOCC meeting on Jan. 13.
BB&T is a Fortune 500 company headquartered in Winston-Salem, North Carolina, and according to its website, “is one of the largest financial services holding companies in the U.S. with approximately $208.8 billion in assets.”
The BOCC selected BB&T over a proposal by Wells Fargo, the current underwriter of the debt, and if approved, the deal would set a fixed interest rate of 2.61 percent for 15 years, down from a 5.2 percent interest rate over 20 years set in 2009.
In the wake of declining revenue, overspending and criminal activity involving some county elected officials leading up to 2009, Elbert County borrowed $7.3 million from Wells Fargo to refinance the county’s justice center. The terms of the 2009 loan required the county to put up $10 million of collateral, including $3 million of water rights.
At the Jan. 13 meeting, Rick Pettitt, Elbert County’s treasurer and public trustee, told the BOCC that the proposed refinancing deal would eliminate the requirement for the county to maintain a $500,000 cash reserve as well as unencumber the collateral required by the previous loans, with the exception of the justice center.
Finally, the new loan would free up an additional $180,000 per year that the county is currently setting aside to address a $2.1 million balloon payment due at the end of the 2009 Wells Fargo loan.
The BB&T offer was selected over Wells Fargo’s proposal of a 2.95 percent fixed rate of interest for seven years followed by an adjustable rate for the remaining eight years of the loan. Additionally, Wells Fargo’s offer required many of the same covenants as its 2009 loan.
The county became eligible to refinance the debt last year following several moves by the BOCC that put Elbert County back into good standing, and if all goes according to plan, the loan with BB&T is expected to be approved at a Feb. 24 BOCC meeting and closed on March 1.
Ross expressed his appreciation to Pettitt and the team at Hutchinson, Shockey, Erley & Co. — a Chicago-based investment bank and broker-dealer with a Denver office — for putting the deal together.
“It’s quite a great savings and more security for the county,” Ross said.