The refinancing of six Little Rock Wastewater bonds will lessen the blow of future sewer rate increases, the utility's finance director said Wednesday.
Finance Director Debbie Williams asked the Sanitary Sewer Committee to authorize the wastewater utility to take its refinancing request to the Little Rock Board of Directors, which has final say on sewer rate and bond decisions.
The committee, which oversees most finances and operations of the utility, unanimously approved the recommendation to refinance the six bonds.
If approved, the refinancing would reduce the utility's annual payout on the debts from a little less than $13 million to a little less than $12.5 million. The payoff dates wouldn't change.
The six bonds were issued in 1996, 2004 and 2007. Their maturity dates vary but range from 2019 through 2037.
Refinancing the bonds at lower interest rates will save the utility a total of $12.1 million over the life of the bonds, including approximately $235,600 in savings this year and about $473,000 in 2016.
The bonds' interest rates range from 3.24 percent to 4.91 percent now. The refinancing would reduce the rates to 1.49 percent to 3.71 percent.
"The historical low was 3.27 percent and currently [interest rates average] at 3.29 percent, so we are almost at the historical low. So this is the right time to refinance," Williams told the sewer committee.
"This will allow us to lessen the burden of future rate increases on our ratepayers," she added.
Little Rock Wastewater had plans to ask the city board to approve a series of rate increases last year, but after former Chief Executive Officer Reggie Corbitt was fired last January, the utility's interim administration halted the rate increase plan.
The administration is now researching ways to reduce any necessary future rate increases. The refinancing is one contributing factor to that. CEO Greg Ramon said the utility should be ready to submit the results of its rate study to the sewer commission by the end of May.
The utility's request to refinance the bonds will go before the Little Rock Board of Directors at a Feb. 10 agenda meeting and be voted on at the board's Feb. 17 full meeting.
The total amount currently owed on the bonds is $163.7 million, but with the refinancing would be reduced to $150.5 million.
Metro on 01/22/2015