City OKs plan to pay bond early

by Cameron Rasmusson Staff Writer
| February 28, 2013 6:00 AM

SANDPOINT — The city is paying off debt now to save money in the future.

The City Council approved a measure last Wednesday to close the second of two bonds issued to fund the water treatment plant and begin making payments on it. This will allow the city to dodge interest rate increases predicted for the future that could end up costing the city a lot more in the long run.

After the community approved the measures through a vote in 2009, the city took on two water bonds to finance the construction of the new water treatment plant. The first bond, referred to in city business as the 2012A Bond, featured a principal amount of $9 million and was issued last May. The bond under discussion at the most recent council meeting, on the other hand, totaled $8 million in principal with an interest rate of 2.5 percent and a maturity date of March 1, 2043.

According to Public Works Director Kody Van Dyk, USDA Rural Development officials advised the city to close on the second bond to lock in the relatively low interest rate.

“The USDA believes that interest rates will go up at the end of March,” Van Dyk said. “That’s why they prompted us to close at this time.”

The low interest rate is good news for both the city and its residents, according to Van Dyk, when the city initially started the water improvement projects, the interest rates hovered at over 4 percent, and the timely issuance of the bond will represent a significant savings. That impacted the city’s need to raise water rates in the past, and with the low interest on the second bond locked in, it could do so again.

Like the 2012A Bond, the most recent bond was arranged to pay for regional water improvements — most importantly the $13 million water treatment plant that went into operation last August. The new plant uses advanced filtering technology and expands Sandpoint’s water capacity from 3 million gallons per day to 10 million gallons. Work on the project is nearing completion, and Van Dyk expects that a grand opening ceremony will be in order in the near future.