The city of Selma is considering refinancing its 2011 bond at a lower interest rate, potentially saving $2.5 million over the next seven years.

The savings would mean about an additional $260,000 a year for the city’s bottom line.

“This money is real. This money is available,” said Selma Mayor George Evans.

The city is currently paying 6 percent interest on the $11 million bond. Only about $500,000 of principal has been paid down over the past five years.

David Langham, a municipal investment banker with INTL FCStone Financial Inc. in Mobile, advised that current interest rates are just below 3 percent.

“Think about $11 million and what 3 percent interest savings will do for you. It’s a lot,” Langham said. “It’s going to allow you guys as a council to come in and look at your budget and figure out what it is you need to do and how that money is spent. There is no reason you need to send that money off to investors when it can stay here in Selma.”

Langham has addressed the council several times this summer seeking the city to refinance with his company. His company would charge a 2.7 percent fee, which would total approximately $375,000.

Langham told the council his company’s fees are less than what was paid for the original bond, about 3.2 percent or $390,000. He also said the $2.5 million figure would be net savings after any fees.

“I’m not going to charge you anymore than you paid last time,” Langham said.

The deal also includes $600,000 the city would have paid to Dallas County over the next three years for jail space.

A 20-year contract between the city and county ends in 2019, and Evans had promoted the idea of the city building a new public safety building and ending that contract.

Langham said the city could also pay off the bond quicker by refinancing.

The city currently pays about $2.6 million a year to service debt.

That amount would drop to $1 million in 2025, but payments would continue until 2039 unless the bonds were paid off early.

“Kind of let that sink in how long that is,” Langham said.

With the refinancing, Langham said the city would continue to pay $2 million a year and erase nine years of liability.

“We are reducing your debt and your liability by nine years, while reducing your interest rate by half,” Langham said. “It’s going to put you in a really good position.”

If the council approves the refinancing at its next meeting, the deal could be finished by early October, according to Langham.