Little Rock Wastewater plans to refinance two loans at new interest rates to save the utility about $3.4 million over the next two decades.
The refinance savings equate to $182,866 each year, on average, through 2039. The extra money will go toward the utility's Sewer Line Renewal Program that rebuilds deteriorating sewer lines.
The Little Rock Water Reclamation Commission, formerly known as the Sanitary Sewer Committee, which serves as the governing body of the utility, voted unanimously Wednesday to refinance two bonds.
One was taken out in 2008 and has a balance of just under $13.7 million. The other was taken out in 2009 and has almost $5.9 million left to pay off. The two bonds are currently under 5.63 percent and 4.67 percent interest rates, respectively. It's estimated that they will be refinanced at 2.93 percent.
"This is just tremendous. The Brexit issue allowed interest rates to go down, and we are certainly taking advantage of that," said Chief Executive Officer Greg Ramon, referring to a British vote this summer to withdraw from the European Union, which affected world markets.
The 2008 loan is set to be paid off in October 2038, and the 2009 loan will mature in December 2039.
This is Little Rock Wastewater's third refinancing in the two years Ramon has been at the helm of the utility. In all, those refinancings are estimated to save the utility almost $14 million over the life of the loans.
When he first came on board in 2014, Ramon instructed the finance department to re-evaluate the utility's finances and look for savings in the interest of ratepayers, he has previously said.
"We've had some tremendous savings," Ramon said Wednesday.
The Little Rock Board of Directors will have to approve the latest request before the loans can be refinanced.
Little Rock Wastewater also announced its intent Wednesday to take out a new loan in 2018 for an estimated $63 million worth of projects that would include construction to help mitigate sewer overflows during heavy rains and to improve the quality of sewer service in the city.
The loan would be through the Revolving Loan Fund Program with the Arkansas Natural Resources Commission.
"The Revolving Loan Fund Program process takes anywhere from 10 to 14 months to complete, so we are wanting to start this process now in order to have funds available as close to January 2018 as we can," said Debbie Williams, the utility's director of finance.
Resolutions adopted by the Little Rock Water Reclamation Commission on Wednesday begin the application process, she said.
There are 21 projects the utility hopes to accomplish with the funds from the proposed loan, including 17 construction projects. The utility also hopes to assess 550,000 linear feet of sewer lines that are greater than 18 inches in diameter.
Metro on 08/18/2016