SD1: Bond Refunding Saves Rate Payers $75 Million through 2041
Sanitation District 1 announced that it completed its latest round of bond refunding which the utility said would save rate payers $14.8 million in debt service over the life of two refunded bond series.
Combined with two previous rounds of bond refunding over the last four years, SD1 has saved current and future ratepayers $74,597,983, a news release said. This amounts to an annual savings of nearly $3 million per year through 2041.
“This is a tremendous benefit for SD1 ratepayers,” said SD1 Executive Director Adam Chaney. “SD1 is continuously looking for ways to become more efficient in its mission to reliably provide the Northern Kentucky region with wastewater and storm water services. This is just the latest example.”
A bond refunding retires old debt with the proceeds of newly issued debt that is secured at a more favorable interest rate. The savings realized from a refunding are spread out over the life of the bonds. This year, for instance, SD1 will save $3,343,707, a news release said.
In 2016, SD1 issued its largest bond refunding, securing savings of $35,685,611 by refunding bonds that had been issued in 2005, 2006 and 2007. Three years later, the District refunded bonds from 2009 and 2010, generating a savings of $24,097,897.
The refunding also lowers the amount of money SD1 must keep in its debt service reserve fund, freeing up millions of additional dollars to invest in other priorities.
“Every dollar we save through bond refunding is a dollar we do not have to collect from ratepayers,” Chaney said. “So saving about $3 million per year over the next 25 years is very significant. It allows us to invest in critical infrastructure around the region while keeping rates as low as possible.”
Photo: Adam Chaney (provided)