Title
Financing for Wastewater Treatment Plant Loans
Recommended Action
None
Staff Recommendation
Staff recommends refinancing the existing debt associated with the Los Alamos Wastewater Treatment Plant for 12 years, and financing the design and construction of a new White Rock Wastewater Treatment Plant for 25 years. With Board concurrence staff will proceed to execute the loans immediately.
Body
Two financial milestones were recently reached in the effort to replace the White Rock Wastewater Treatment Plant. On February 8, 2018 a payment of $2,500,000 was made towards the existing loan for the Los Alamos Wastewater Treatment Plant. On April 7, 2018 the regular scheduled annual payment of $964,888.54 was made towards the same loan. The resulting balance of the loan has been decreased to $7,029,504.37.
Staff recommends two actions associated with funding the new plant. The first is to refinance the existing loan now that interest rates are lower, and the second is a new loan for design and construction of the new plant. Both loans will be through the Clean Water State Revolving Loan (CWSRL) fund, administered by the New Mexico Environment Department Construction Programs Bureau.
Refinance Existing Loan
We are presenting our options to refinance and a staff recommendation for Board acceptance for the term of the loan to refinance. CWSRL interest rates are 2.38% now, and our existing loan is at 3.0%. There is a refinance fee in the amount of 2% of the loan amount due at the time of execution of the loan agreement. In our case this fee is $140,590.09. The variable of significance is the term of the loan which establishes the interest savings and annual payments. We must balance the annual payments of this loan combined with the annual payments of the new construction loan to maintain a sustainable wastewater fund. Four scenarios are summarized below to demonstrate the benefit of refinancing the loan.
Term Interest Rate Loan Amount Payoff Date...
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