FPUD approves debt refinancing for wastewater treatment plant

The Fallbrook Public Utility District approved the refinancing of its debt for FPUD’s wastewater treatment plant.

FPUD’s board voted 5-0, Monday, Sept. 28, to approve the authorizing resolution for the refinancing and to approve the form of the documents for the transaction. FPUD staff will finalize the documents closer to the sale of the bonds.

The wastewater treatment plant was rehabilitated to increase the facility’s reliability and improve compliance with regulatory requirements, and the upgrades also allowed for storage of recycled water.

The new dechlorination facility ensures compliance with FPUD’s National Pollutant Discharge Elimination System permit issued by the Regional Water Quality Control Board in 2012. Improved control and automation of the facility allows for remote monitoring and troubleshooting which minimizes disruptions and failures.

The State Water Resources Control Board has a Drinking Water State Revolving Fund which provides 20-year loans at interest rates between 1.5% and 3.0%. FPUD obtained a $29,609,644 State Revolving Fund loan, which will be paid back over 20 years at a rate of approximately 2.2%, to finance the construction along with oversight and administrative costs for the wastewater treatment plant.

Arcadis was awarded a $690,500 construction management services contract in August 2012 and Archer Western Contractors received a $25,507,000 construction contract in May 2013. Construction began in July 2013 and was completed in December 2015. The upgrades were the first for the treatment plant since 1985.

The outstanding principal on the State Revolving Fund loan is $24,668,471. The loan matures March 31, 2036.

“Our rate is very, very low,” Don McDougal, FPUD board member, said.

Current interest rates are now low enough that FPUD will likely save money by refinancing the debt. A 5-0 FPUD board vote, Aug. 24, approved the development of a financing plan and debt documents. Based on Sept. 16 market interest rates, FPUD expects to save approximately $62,000 each year through 2036 even with the cost of issuance for the new bonds.

The estimated total savings through the maturity date are $763,030, and the maturity date would not be extended. All transaction fees associated with the refinancing will be paid from the new bond issuance.

“It’s a good amount of savings. It’s not huge. It’s not little,” registered municipal adviser Steven Gortler said. “It’s not feasible to save much more than that.”

An agency rating will be necessary before the bonds can be sold. An official statement for potential investors to review will also be created.

Joe Naiman can be reached by email at [email protected].