City refinances debt
Expects payment reductions
With the October increase in sewer rates already in effect, and rates poised to increase another 16 percent in the coming year, the Madras City Council passed a resolution Nov. 13 to consolidate and refinance some of the related debt.
The city expects to lower its debt payments and cut down on time spent processing numerous payments through refinancing about $11.5 million in debt incurred over the past two decades for expansion of the city's wastewater infrastructure.
"By doing this, the city is poised to reduce its debt payment to provide immediate relief for sewer user fees in the next three years," said Kathy Snyder, city finance director. "That translates to increases in single digits, rather than double digits."
The city hired Andy Parks, founder and CEO of GEL Oregon, as a financial advisor to look into ways to reduce the city's debt payment. Parks, who also served as Madras' interim city administrator in 2001, analyzed the wastewater funds, and presented the analysis to the City Council at a work session Oct. 30.
The city chose a consolidation plan that will affect two wastewater funds with a total of six loans dating back to 1991.
"The important message is that the city has taken action quickly to minimize the rate increases," she said.
At the same time, the city authorized the refinancing of the $1.1 million loan used to construct the heavy aircraft maintenance facility at the airport.
That loan, which dates back to Oct. 1, 2008, is currently at a rate of 4.99 percent for 25 years. Snyder anticipates savings of up to 1.25 percent.
"It's a big deal," she said, noting that there will be significant savings.
Time savings will also be substantial. Currently, Snyder said, "There are multiple payments to multiple agencies with multiple reporting requirements. (With the consolidation) I'll have one entity to provide payments to and report to."
The city expects to have the transactions complete in January.