The Effingham Industrial Development Authority has voted to seek another method of financing its debt.

IDA members are exploring going to the bond market and issuing approximately $39 million in revenue bonds and will refund the current revenue bonds held by Wells Fargo.

“This will allow us to pay off the debt,” IDA Chairman Dennis Webb said. “And if we have property sales, we can pay the debt off faster.”

The IDA has debt on its Research Forest Tract and on the northern section of its I-16 holdings, totaling 4,600 acres. The IDA owns the southern tract at I-16 free and clear.

Going to the bond market to finance the debt and away from the Wells Fargo notes is expected to allow the IDA to market its land for prospects more quickly. Under the arrangement with Wells Fargo — the IDA originally had its financing with Wachovia until that firm was taken over by Wells Fargo — 85 percent of the proceeds from land sales had to go to Wells Fargo.

“We can apply all or part of the property sales proceeds to paying the debt off much earlier than the 30 years,” Webb said. “It gives us freedom to do things with the property we can’t do with the existing bonds.”

IDA members met with Trey Monroe of Merchant Capital on Wednesday morning to discuss how to take their own bonds to the open bond market. The IDA also will seek to get a bond rating, which Monroe expects to be at least an A-minus.

“I expect a good credit rating because of your financial situation,” Monroe told IDA members. “I would expect the rating to come out pretty strong.”

The Wells Fargo notes would be due June 2012, and the IDA has been exploring other options for several months. They offered to extend the deal terms by one year but also wanted a reduction of $3 million, which would have all but eliminated the IDA’s reserves.

Webb said that offer “was not very appealing to us.”

With its move away from Wells Fargo, the IDA would keep a reserve of $1 million.

“That gives us the cash reserves to do the things we need to do,” IDA member Chap Bennett said. “Plus, we keep one year of operating expenditures in the bank.”

The interest rate on the bonds would be fixed for 30 years. Because of the swap the IDA got with its original bonds, its interest rate was more or less fixed to a range. The swap was put in to protect the IDA’s rates from market volatility, but the drop in interest rates has wound up negating some of the planned effect of the swap.

“This will take away the anxiety we have felt on the maturity of the existing debt,” Bennett said.

The IDA also would pledge the equivalent of its property tax receipts to the bonds, which also are currently pledged to the Wells Fargo debt, and it would not result in any land becoming encumbered, Bennett pointed out.