Paducah moves to retire two small bond issues, staff says move saves about $30,000

The Paducah Board of Commissioners on March 10 authorized a municipal order to pay and discharge the citys remaining General Obligation Bond Series 2013A and to defease General Obligation Refunding Bond Series 2018B using existing general fund revenues and an escrow with U.S. Bank as paying agent.

City finance staff said the 2013A bonds (originally $1,120,000) have an outstanding principal of $265,000 and are callable without penalty; the 2018B bonds (originally $2,670,000) have an outstanding principal of $495,000 and will be defeased by funding an escrow sufficient to cover payments through maturity. Finance told the commission the transaction will reduce the citys future debt-service commitments and save about $30,000 overall while lowering appropriations by roughly $270,000 for each of the next three years.

A representative introduced as Mark Rawlings (Baird) said the remaining interest rates on those bonds were "essentially 4 percent," while current invested funds were yielding about 3.5%, making prepayment financially prudent. A commissioner asked about interest rates and the citys return on cash; staff and the Baird representative replied with the interest and yield figures.

The municipal order passed on roll call with Commissioners Henderson, Smith and Thomas and Mayor George P. Bray recording "aye." The measure authorizes deposits to the sinking and escrow funds and execution of related documents to complete the defeasance and redemption.