GATESVILLE – Gates County officials will move forward with a plan aimed at paying down its outstanding debt and hopefully saving hundreds of thousands of dollars in the process.

At their May 2 meeting, the county’s Board of Commissioners reached a unanimous decision to seek out the best interest rate from financial institutions regarding refinancing a loan that was used to build the new Department of Social Services office. Currently, the county pays $112,337.93 annually on a remaining balance of $1,747,615. The original loan was for 30 years.

County Finance Officer Sandy Pittman provided the commissioners with a spreadsheet showing the DSS loan payment schedule.

Commissioner John Hora asked if the 2.39 percent interest rate was still available on the loan. Pittman answered by saying the rates are based on information provided by BB&T.

“I have not sent out anything officially that asks for specific interest rates,” Pittman said.

“I talked to a banker and have put together some numbers for us to look at,” Hora said.

In his presentation, Hora said by refinancing the DSS loan for 10 years at a 2.39 percent interest rate, the county could save a shade over $861,000.

“That’s an annual savings of $86,115 a year over a 10-year period,” Hora stated.

He reminded his board colleagues that the savings would go towards covering a higher annual payment, which would increase to $198,547.01. However, the note will be paid off 15 years earlier.

At an interest rate of 3.39 percent, the savings over the life of the loan would be $591,559.81.

Hora asked Pittman does this matter have to go before the state’s Local Government Commission (LGC) for re-bid, to which Pittman said it did.

“I talked to Southern Bank here in Gatesville and 3 percent is a very doable rate,” Hora noted. “At 3 percent that’s $798,000 worth of savings. This is almost a no brainer.”

Hora said he had closely studied the county’s balance sheet – noting that in March of last year there was a positive cash flow of $685,000. As of March 31 of this year, Hora said the positive cash flow is $869,000. He added that the county’s fund balance grew by $559,000 last year. He used those numbers to prove that the county has the funds to pay down the DSS debt.

“Looking at the LGC numbers, Gates County now owes $7,902,000 in debt, that’s with $1.5 million on the balance sheet (in new debt for the library),” Hora noted. “It’s imperative that we pay our debt down. That’s what many corporations are doing now, becoming lean and mean by paying down their debt and increasing their profits. We as a county need to do the same thing.”

Hora suggested that the county needs to send out RFP’s (Request for Proposals) in order to gain the best interest rate possible and pay down the DSS debt over a 10-year period.

“Every day we let this go by costs the county $300,” Hora said. “We need to become proactive.”

Hora put a motion on the floor to solicit RFP’s for interest rates in an effort to pay down the loan within 10 years.

Commission Vice Chairman Henry Jordan asked if an interest rate for a 15-year loan could be obtained as well. Commissioner Jack Owens wanted the motion to show an accurate dollar amount of the loan that will be refinanced.

Hora amended his motion, asking that RFP’s be sent out requesting an interest rate for 10 years and 15 years on a principal amount of $1,750,000 for the sole purpose of paying off the county’s outstanding DSS loan. He added this would save the taxpayers between $745,000 and $861,000.

Owens offered a second to the motion, which passed without objection.