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AHOSKIE – It may cost more over the short term, but in the end the Town of Ahoskie is expecting to save millions in debt service payments.

At their monthly meeting here Tuesday night, the Ahoskie Town Council adopted a resolution that seeks approval from the Local Government Commission (LGC) for the town to authorize the issuance of general obligation bonds in the amount of $9,621,000. That money will be used to pay-off a previously issued utility system general obligation bonds held since 2011 by the United States Department of Agriculture. USDA-Rural Development was the financing agency that handled the loan that was used to construct a much-needed Wastewater Treatment Plant (WWTP). That $17.87 million project was aided with $5 million in grant funding from various sources.

“What we’re doing is refinancing existing debt, not taking on new debt,” Town Manager Kerry McDuffie told Council members at Tuesday’s meeting, referencing a plan to pay-off the $9,621,000 remaining on a 40-year loan for Ahoskie’s complete overhaul of its wastewater treatment plant and other improvements to the town’s sanitary sewer system.

McDuffie further explained to the Council members that what they are approving at this point is just a resolution that expresses their desire to move forward with a plan to search for a financing partner (bank).

“The LGC is scheduled to hear our proposal, read this resolution and the supporting documents, at their March meeting,” McDuffie noted. “Upon their approval, then it comes back to you [Council] to see if you wish to proceed in seeking a financial partner.”

By that time, McDuffie said the town would know the interest rate on the loan, which will be the determining factor on the annual debt service payments.

McDuffie later told the R-C News-Herald that depending on what the interest rate is, this proposal will cost the town approximately $40,000 more per year. However, it lowers the number of annual payments from 31 to 20 years.

“The net difference is that it saves us over five million dollars over the life of the loan,” he noted. “Plus, just say we decided not to go this route and keep paying off the USDA loan for 31 more years. Well, by that time, it’s 2052 and time to start all over again in renovating or rebuilding the wastewater treatment plant. You jump out of one loan right into another.”

“So, we’re not committing to anything right now at this point,” asked Councilman Roy Sharpe, which he was told that was correct.

A motion was made by Councilwoman Jamie Burns to adopt the resolution. Sharpe offered a second and the motion was approved without objection.

A second motion was made and approved for a bond order, which is a document allowing town staff to move forward in soliciting requests for proposals from financial institutions.