PTC to meet on WASA bond decision
Council approval will save extra $500K on bond refi
The Peachtree City Council will hold a special called meeting Wednesday morning to vote on a resolution to back the refinancing of bonds for the city sewer system.
If approved, the effort will help the city’s Water and Sewer Authority save a total of $1.8 million over the life of the loan. A no vote might force WASA to refinance the bonds for a savings of $1.3 million instead.
A no vote would also require WASA to pony up $1.8 million in a reserve fund that would not be required with the city’s backing. The city’s support also helps WASA achieve a lower interest rate on the financing.
Though the additional savings sounds like a no-brainer, that wasn’t the case when the issue was first brought up in September. WASA members initially said they wanted to remove a clause in the existing bond covenants that gives the city council a veto power over any proposed extension of sewer service beyond the city limits.
WASA soon changed course however and dropped that request. There have been no recent plans or proposals to extend sewer service beyond the city limits, WASA officials have said.
WASA is a five-member autonomous board which operates the city’s sewer system. Each board member is appointed to four-year terms by the city council.
At a council meeting earlier this month, Councilman Eric Imker expressed displeasure with a proposal to reappoint WASA board member Tim Meredith, citing the sewer rate increase in October 2010 from WASA that raised the bills of most residential customers by $20 a month or more.
The rate increase was necessary because WASA’s revenue had dropped to the point where it once had to take $400,000 from its reserves to pay its annual debt service. Prior to the refinancing, WASA had to meet an annual debt service of $3.24 million to cover the previous expansion of the city’s sewage treatment capacity.
The drought leading into late 2010 was blamed for much of WASA’s revenue drop, as customers are billed based on how much water they use. WASA also took a significant financial hit in 2006 with the closing of one of the city’s largest sewer customers: the Photocircuits manufacturing plant.