County looking to refinance jail bond

By Tim Barnum
News Editor | news@ogemawherald.com

WEST BRANCH — The county is looking to refinance its bond on the Ogemaw County Jail to save money on interest payments.

Ogemaw County Treasurer Dwight McIntyre said the county’s accounting agency for its jail bond, Umbaugh and Associates of Lansing, recommended refinancing, as interest rates on bonds are lower than when the bonds were sold in 2008 to finance construction of the jail. The county sold $6 million in bonds to fund the project.

McIntyre said interest rates would range from 0.8 percent to 3.5 percent over the repayment period if the bond were refinanced.

“We’d be refinancing $6,430,000,” he said. “And the interest rate on the old bond ranged anywhere from 4 percent to 6 percent. It varied over the 30 years.”

The lower interest rates, according to McIntyre, would decrease the county’s bond repayments, which have been around $390,000 a year.

“We expect to save around $30,000 a year on our payment,” he said.

McIntyre said Umbaugh and the county have remained in contact since the jail bonds were sold, and the accounting firm alerted the county to the lower rates.

Bonding agencies will be able to bid beginning in November, McIntyre said. The bidding period will end Dec. 12, and the county will choose the new bonding agency soon after, as long as the bidders provide the county with the interest rates it is seeking, he said.

“If the bids don’t come in at what we want them to, we won’t do it,” he said.

Savings on the bond payment, if it were in fact refinanced, would not be fully realized until the 2013-14 fiscal year, according to McIntyre. He said the county pays on the bond twice a year — a principal payment in May and principal plus interest in November.

McIntyre said Huntington Bank, the current bonding agent for the jail, may not be the agent after refinancing.

“I would imagine that it could change again,” he said.

Once refinanced, the bond will continue being repaid over the same period of time as the original bond, McIntyre said.

“We originally went out for 30 years,” he said. “And when we go out for the new bond, it’ll be for 26 years.”