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JAN 1 989 $0OK 75 •13GE 62 <br />Farmer's Home Administration recently announced that they are <br />offering a discount purchase program in order to reduce federal <br />loans. Because most of Indian River County debt is 5% over forty <br />(40) years, the discount offered means a considerable reduction in <br />the principal amount of debt outstanding. The overall annual debt <br />service will remain about the same if We participate in the discount <br />program; however, we would be released from some of the Farmer's Home <br />Administration restrictions which in the suture could discourage or <br />hamper the expansion of the Utility system. An additional plus is <br />that the refinancing would improve several of our financial ratios <br />(e.g. debt/asset, debt/# customers, debt/per capita, debt/equity). <br />Staff has reviewed'the merits of refinancing the debt and feels that <br />it will definitely be in the county's best interest and will be <br />approved by the Financial Advisory committee at it's next meeting. <br />There is a deadline of May 9, 1989 if the county wishes to <br />participate. Staff must begin working with Farmer's Home <br />Administration, Bond Counsel, Bond Insurer's, Financial Advisers and <br />rating agencies to draft bond documents. , This takes considerable <br />time; therefore, we need permission to proceed immediately. <br />tECOMMENDATION <br />Board of County Commissioners give staff authority to participate in <br />the Farmer's Home Administration loan program and proceed in <br />refinancing the debt. <br />Administrator Chandler advised that the FmHA has informed us <br />of the possibility of refinancing our utility debt. Initially, it <br />appears that it may be to our advantage to do so, and the FAC and <br />bond counsel have it under consideration. There is an extremely <br />tight timetable on this, and he just wanted the Board to know that <br />we are pursuing the possibility, and will be bring it back to the <br />Board with specific recommendations. <br />Commissioner Eggert asked what kind of interest rate we could <br />expect after the discounting, and Administrator Chandler explained <br />that right now we are at 5% and the preliminary indications are <br />that the overall costs would be the same or Tess. However, there <br />is a distinct advantage to us in getting out from under those bond <br />convenants. <br />Commissioner Scurlock emphasized what a welcome addition Mr. <br />Chandler is to our finance team. <br />22 <br />