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County to save $7 million by refinancing of bonds

May 19, 2004|by TARA REILLY

tarar@herald-mail.com

Washington County will save nearly $7 million in interest on water and sewer bonds by refinancing at lower interest rates.

The Washington County Commissioners unanimously approved the refinancings, expected to result in a savings of $6.9 million over the life of the 20-year bonds, at a Tuesday meeting.

Commissioners Vice President William J. Wivell said after the meeting that the interest rate savings eventually might lower water and sewer rates paid by customers.

The county's principal water and sewer debt of about $43 million won't decrease, because interest isn't included in that amount, Commissioners President Gregory I. Snook said after the meeting.

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The commissioners' action Tuesday means the county will pay a .85 percent interest rate on the refinancing of $10.4 million in wastewater treatment bonds and on the refinancing of $6.9 million in pretreatment bonds.

The interest rate had been 5.3 percent for the wastewater treatment bonds and 7 percent for the pretreatment bonds, according to the county.

The debt service, or principal and interest on the wastewater treatment bonds, will decrease from $15.8 million to $12.5 million, a savings of $3.2 million.

The debt service on the pretreatment bonds will decrease from $12.9 million to $9.2 million, a savings of $3.7 million.

Lester Guthorn, a financial consultant for the county, said the savings were "dramatic."

"I don't even think there's any refinancing that's even been done at that level," Guthorn said. "I hope you all walk away today happy that you got this done."

"It's going to be a savings that will be passed on to the users in the long run," Snook said at the meeting. "The low rates are very good."

Snook and Commissioner John C. Munson said the commissioners haven't discussed what they'll do with the savings or whether the savings will result in the county lowering how much water and sewer debt it pays off each year.

Munson said he favors the county continuing to use about $2 million a year from its general fund to chip away at the debt as quickly as possible.

Snook and Munson said they didn't know what the total county payments are toward the debt each year because they didn't have the numbers in front of them.

The county's Conococheague Wastewater Treatment Plant opened in 1992, and the Conococheague Pretreatment Facility opened in 1994.

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