City to get electric system upgrades

Kile Brewer
Posted 4/4/18

GREEN COVE SPRINGS – The City of Green Cove Springs will borrow up to $10.7 million loan from CenterState Bank in Jacksonville to improve the city’s electric company after a unanimous vote …

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City to get electric system upgrades

Posted

GREEN COVE SPRINGS – The City of Green Cove Springs will borrow up to $10.7 million loan from CenterState Bank in Jacksonville to improve the city’s electric company after a unanimous vote Tuesday. The money will be borrowed to speed up capital projects related to improving the city’s electric utility after years of numerous customer complaints about outages and surges caused by the aging infrastructure. Improvements would include replacing the city substations as well as things like pole replacement and the removal of tree canopy that might threaten power lines. The city hopes that once these projects are completed their customers will be left with a much more reliable electric utility going forward. At its January 23 meeting, the council approved their financial advisor, Public Financial Management Inc., to solicit loan proposals from banks for fixed and synthetic fixed rate loans in amounts not-to-exceed $10.7 million and $7 million. The consultant then would rank the proposals and make a recommendation to the city on which bank to borrow from. PFM recommended a regular fixed-rate loan proposed by CenterState Bank of Jacksonville who proposed interest rates for both loan amounts in 15 or 20-year terms at around 3 percent or just under. This rate was lower than other offers, especially when comparing the total debt service at the end of the loan’s term. PFM also noted that CenterState’s loan offer was more flexible than others and allowed the city to make draws from their not-to-exceed amount during construction. “CenterState has the lowest estimated annual cost, based on the proposed rate,” said Jeremy Niedfeldt, a director with PFM. “Our goal is to decide the size, the term, and whether it will be a synthetic fixed rate or traditional fixed rate.” After Neidfelt presented the reasons his firm picked CenterState, council was asked for comments on PFM’s findings. Council member Van Royal applauded their search and noted that PFM came back with a much lower rate than it proposed in January. “From where we thought we might be, we could pay it in 15 years and still be at less than we were in 20 with what we originally looked at,” Royal said. “I like the idea of less, I like the idea of 15 years.” Other members of the council shared Royal’s sentiments with the lower-than-expected interest rates and possibility of paying the loan off in a shorter time. Council member Pam Lewis, via telephone, spoke in favor of the 15-year fixed rate loan at the original amount of $10.7 million. “I think everything on that list is significant and we really need this,” Lewis said. “Like I’ve said in the past, we’ve been piecemealing this for a long time and I would just really like to get this done.” Mayor Mitch Timberlake also discussed staying with the original amount at $10.7 million, reminding citizens how the council reached that amount when first planning for a potential loan. “While we’re looking at a $10.7 million loan with a list of items to make up that $10.7 million, I remind you that the original list started out, or in excess of $20 million,” he said. “These are the things that we are focused on now, these are things that are an extreme priority.” Since the council voted on a loan provider, its bond counsel, Jacksonville-based Bryant, Miller, Olive, Attorneys at Law, will prepare a resolution for the council that will allow it to approve the loan as well as the closing costs for the transaction which are expected to be around $60,000. City Staff expects the resolution to be on the May 1 council agenda.

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