Belmont County pursuing savings options
ST. CLAIRSVILLE – Belmont County commissioners are looking at savings options through water and sewer refunding issues and the possibility of establishing a better rate for their debt.
The commissioners heard from Auditor Andrew Sutak and Andrew Brossart, vice president of Fifth Third Securities, Inc., as well as Mark Esposito, director of Belmont County Sanitary Sewer District.
Sutak noted that the county has numerous bond issues, some older than 20 years, each with an open clause allowing for a refunding issue. He pointed out the higher rate of interest when the bonds were initially taken out.
Since interest rates are dropping, the county is looking into the possibility of refunding in order to save money for the water department.
“Refunding this issue, it brings interest rates down, it brings our payments of debt down. It allows a little more money back into your water/sewer or whatever debt we have. Periodically we do these things,” he said.
Brossart said they are timing the refunding move to a period when the county can have a savings of three percent. He submitted two proposals slightly higher than that.
“We want to make sure we grab this as soon as we can if you want to move forward with this recommendation,” he said, adding the market for credit with a bond issue of this size is an interest cost of 4.25 percent until 2037. “We’re not at all-time lows, but we’re still at historical lows in terms of where rates are at.”
Current rates are at six to seven percent for a 1992 USDA loan and a 1997 USDA loan. Brossart said they were beginning to see a trend of interest rates rising back up.
Sutak pointed out that when interest rates go up and there is excess money based on the earnings of those cash balances, it can be used to pay the debt.
“That’s a good trend we may want to look into,” Sutak said.
Brossart noted the two issues include about $6 million in refunding with considerable fixed costs.
“When you combine issues like this, you save a lot of money,” he said, adding that the larger the size and the marketplace, the more attention they get from buyers.
He said the 1997 loan refund is $249,000 today, about $10,000 yearly, with a savings of 3.9 percent. The 1992 loan is $380,000 in savings, $20,000 yearly, a savings of 17 percent.
“Those two issues together are a pretty good threshold today,” he said.
Commissioners authorized them to move forward and proceed with refinancing with regard to the water debt. Brossart said they hope to sign and set the rates by March 3 or 7.
Commissioner Matt Coffland suggested looking at options with the county’s other projects as well.
Esposito also spoke about pending upgrades. He noted the age of the infrastructure and added that the recent evaluation of wells showed a loss of capacity due to plugged screens. In the interest of increasing capacity, a study was completed and produced estimated costs of engineering, design and bidding. Bidding projects should begin next month.
They are also working with Bethesda, which has received some funds for the replacement of its water distribution system. Bethesda is receiving more requests for expansion beyond the corporation limit, which the board must approve.
In order for the county to sell water to Bethesda, the village must be connected to the 2-million gallon water tank outside of Belmont. There is a 4500-foot gap that must be connected. The county will cover material costs while Bethesda covers installation costs with no debt or obligation for the future.
“It’s a win-win situation,” Esposito said. “I think it’s best for both organizations.”
He also noted planned upgrades at Fox Shannon. Cost may be $5-7 million for the possible increase in capacity and maintenance issues. The county is also looking into system upgrades to accommodate the oil and gas industry, such as a force main at the mall and a pump station for growth in the mall area.
Hotels are also being constructed in the Morristown area, and the infrastructure must accommodate them. Other projects include the sewer line at Route 40 east of St. Clairsville.
“We’re looking at tripling our system. It took 50 years to build, in a sense double to triple in three years,” Esposito said.
“You’re talking about expansion of the entire infrastructure of the county, which means you’ve got some business and you’ve got some commerce churning, so obviously we need to be able to,” said Commissioner Mark Thomas, noting that the county was being inundated with requests to sell water. “The reality is we’re spending money to make money.”
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