|Written by Mark Lineberger|
|Wednesday, 22 October 2008 12:52|
The Camp Verde Town Council signed an agreement with the Camp Verde Sanitary District in 2007 promising $135,000 a year for 25 years to help pay for the current sewer expansion project.
Now the council wants to go directly to the sanitary district’s lenders to try and work out a better deal.
The sanitary district has placed two measures on the November ballot. If they pass, the district board hopes that it can borrow more money to complete the project after cost projections skyrocketed following an engineering failure during the construction of a new wastewater treatment plant.
It would also allow the district to refinance its loans at a potentially lower interest rate, saving thousands of dollars over the next couple of decades.
The town, still obligated for $135,000 a year, wouldn’t see a benefit. But Town Manager Michael Scannell said that if the town can work out a deal with the lender and the sanitary district to insure the town’s money is used to eliminate a required debt service fund, the cost of borrowing money, instead of the district’s operations, the town could potentially save $12,000 to $13,000 a year.
It would still allow the district to get the money it needs to finish the project, Scannell said, but would benefit all the taxpayers of Camp Verde with an overall savings.
The plan assumes that the district will be able to refinance their loans at a 3.75 percent interest rate. If the actual rate is higher, Scannell said, there’s no point in pursuing this plan since there would be little to no
The closer the rate gets to 5 percent, the less money the town can save when the actual costs of the loan, including attorney and consulting fees, are considered.
Mayor Tony Gioia said he had approached the leadership at the Water Infrastructure and Finance Authority, the agency the district is turning to for refinancing, with the idea and was told that such a plan was “unheard of.”
It’s not common for a third party to approach a lender like this, Gioia said. The town is obligated to pay the sanitary district, but Gioia said the town should pursue this idea because of the council’s responsibility to the taxpayers.