Wednesday, July 18, 2012

Bellevue to refinance sewer bond?

Idaho Bond Bank effort could reduce monthly sewer rates

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By TONY EVANS
Express Staff Writer

An effort by Bellevue and several other Idaho cities to get municipal bond payments refinanced could save Bellevue $400,000 over the next 18 years, possibly reducing an expected rise in monthly sewer rates.

Bellevue has increased monthly sewer fees several times in the past few years to pay for a state-of the-art $7 million wastewater treatment facility that went into operation two years ago.

Bellevue voters passed a $6 million bond to pay for the new facility in 2005, the same year that sewer rates were raised from $18.21 to $35 per residential hookup. Today, sewer services are costing Bellevue residents $67.20 per month.

Bellevue Planning Director Craig Eckles said he was contacted earlier this month by Zions Bank in Boise and asked to join a group of cities that are paying off a total of 28 municipal bonds.

Cameron Arial, vice president of Zions Bank Public Finance, told the Bellevue City Council on June 7 that the Idaho Bond Bank plans to pool the bonds into a bond issue of up to $100 million.

The new bond would bring a lower interest rate than what prevailed when Bellevue's sewer bond was issued in 2005, Arial said.

Arial said $7,500 in fees to Zions Bank, and up to $59,300 in fees to the Idaho Bond Bank and other administrative costs, would be taken from the refund expected from the refinance of the Bellevue sewer bond. Arial said a $500 application fee from the city would needed, but that the fee would be refunded if the refinance is successful.

The new bond issue would be guaranteed by the state of Idaho and bring lower interest rates, due to the state's high credit rating. If Bellevue defaults on the bond payments, the state would intercept state funding to the city to pay the bond, Arial said.

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Eckles said the plan could reduce the interest rate on the sewer bond payments from 3.25 percent to 2.2 percent, resulting in a $400,000 windfall to the city over the life of the bond. He said the city could use the money to keep sewer rates from rising as much as planned.

Eckles said during a City Council meeting last week that Bellevue should know within 30 days if the city is eligible for the refinancing.

The city's sewer fees are set to rise 4.9 percent per year for the next 18 years, the maximum amount allowed by state law, until $5.4 million in remaining bond payments are paid off.

The city is also paying this year a final $83,000 bond payment for an older lagoon-style sewer plant built in the 1970s.

In other Bellevue news:

( Technical changes in the operations at the city's sewer plant, implemented by Public Works Director Dan Black, will result in a $50,000 annual decrease in expenses, Eckles said.

Tony Evans: tevans@mtexpress.com

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