Debt Refinance Aims to Ease Sewer Project Costs

The City Council on Monday voted to refinance a 2006 General Obligation bond issue, with the addition of some new money to be used to keep resident sewer rate increases steady over the next few years.

The refinancing of the bonds, made possible by historically low rates, will be accompanied by a draw of $2.9 million to be used to finance work to the city's sewer system, including upgrades to the Saylor Street force main and the Route 83/Third Street lift station and modifications to the sludge storage pad.

According to a report written by the Finance, Council Affairs and Administrative Services Committee, the average rate of the outstanding 2006 bonds is approximately 4 percent but the current rate for general obligation bonds is about 2.5 percent.

“Financing these projects,” the report said, will, “allow lower, more consistent annual sewer rate adjustments, and will allow long-lived capital assets to be paid for over time by all users.”

Fourth Ward Alderman Kevin York told the council that the committee had been studying sewer rate increases of at least 5 percent per year for the next few years in order to fund the projects.

The total bond issue, with the refunding and the new money, will be about $10 million. Refunding will give the city about $265,000 in savings on the 2006 bond issue.