NATCHEZ — The Natchez Board of Aldermen voted Tuesday to take advantage of a financial opportunity that could potentially generate $300,000 for the city to pay toward its debt on the Natchez Convention Center.

Representatives from the Atlanta-based Malachi Financial Group appeared before the board offering the city a chance to modify its interest-rate swap transaction agreement with the financial firm.

The swap transaction was executed in 2006 with the Malachi Group and refinanced the convention center bond the city issued in 1999 to pay for construction of the convention center. The swap is a financial derivative designed to lower the cost of the city’s bond debt.

Michael Murray of Rice Financial Products, a New York-based company that is a partner in the transaction, told the aldermen that the modification to the transaction would allow the city to lock in its current interest rate savings for a three or four-year period. He said the city could get the $300,000 lump sum payment up front, instead of over the usual payments the city gets every six months.

Malachi Group’s Chief Executive Officer Porter Bingham said the city would also have to pay approximately $80,000 in legal fees and monitoring fees for the transaction.

Murray said the swap transaction is based on marginal tax rates, which are set by the Legislature. He said as long as the tax rates are not lowered, the city’s swap would continue to generate money.

The board also placed a “collar” on the swap modification. Murray said the collar would take away the city’s risk of losses in the event the marginal tax rates went down. The city would also have the option of reviewing the swap every six months and deciding whether or not it wanted to continue it.

Bingham told the board favorable market opportunities come and go quickly, and the city could miss out by not taking advantage of the current market.

“We would much rather this board be put in a position where it can get results and mitigate the risk,” he said.

Ward 1 Alderwoman Joyce Arceneaux-Mathis made the motion to approve the swap modification and set the city’s floor amount at $250,000, which Bingham said was a reasonable place to start and could be changed later if it was unachievable.

A bond swap is a complicated financial transaction in which one entity, in this case the city, agrees contractually to “swap” a payment usually based on a fixed rate interest index, with another entity whose payment is usually based on a variable rate.

In this case, the city agreed to pay the interest equivalent to the Bond Market Associations (BMA) index. The bank agreed to pay a percentage of another interest index, the London InterBank Offered Rate, or LIBOR.

Historically, such swaps yield profits for both since the bond agent assumes the city’s bonds, which are originally issued at a relatively low, municipal rate, the agent can generally earn a higher rate on its money. The difference is split between the two parties.

In other news from the meeting:

-The board met in executive session for approximately 40 minutes to discuss the hiring of an information technology director, a personnel matter added to the agenda by Gray and potential litigation regarding companies Dirt Works and Worley Brown LLC.

Dirt Works was contracted by the city to do work for the North Natchez Drainage Project. Gardner has said the company disputed the amount final payment to the company by the city.

Worley Brown, LLC purchased the land at the former Natchez Pecan Shelling Company site from the city in May 2006 for $500,000. The company filed a lawsuit against the city last year in an effort to recoup losses when the Mississippi Department of Archives and History the would not allow the company to develop the bluff property for condominiums.

-At the request of Natchez Inc. Executive Director Chandler Russ, the board unanimously voted to approve a joint resolution approving the extension of Natchez Inc.’s economic development legislation to 2018.

The county supervisors approved the resolution last week, and it will now go before the state legislature for final approval.

-Adams County Supervisor David Carter appeared before the board with Natchez City Engineer David Gardner to present the idea of a joint effort between the city and the county to contract out landscaping maintenance services for the city’s throughway streets, starting with John R. Junkin Drive from Natchez Regional Medical Center to the bridge.

The aldermen agreed a joint effort to maintain the throughway streets would be beneficial and asked Gardner and Carter to come up with a plan for the landscaping maintenance.

-The board approved the adjudication of approximately 12 properties with unsafe structures for demolition, debris removal and clean-up.

-Convention Center Director Walter Tipton gave a presentation of the center’s annual report to the board. The report indicated an increase from an approximately $5 million economic impact of the center in 2007 to approximately $8 million in 2011.

The board rescheduled its next meeting on March 13 to March 6. The meeting will be at 11 a.m. in the Natchez City Council Chambers.