Water customers cash in
Published 10:03 pm Wednesday, September 12, 2012
The recent financing of loans used to build Beaufort County’s drinking water treatment system and distribution lines means good news for the county’s water customers.
The county will recoup about $6.94 million in savings from the recent refinancing of the project and that will mean those water customers who had faced a likely rate increase in a year will not have to pay more for their drinking water for some time to come, according to information presented earlier this week to the county’s Board of Commissioners.
“The county’s water districts have always suffered cash flow problems,” Commissioner Jay McRoy said in a presentation to the board. “It’s been very hard to avoid rate increases in the past.”
Over the past five years, rate increases have allowed the county’s seven water districts to meet the interest payments on some $36 million in total debt on their U.S. Department of Agriculture loans.
But these debt payments have accounted for over 60 percent of the annual operating budgets of these water districts, leaving little cash on hand in some districts to cover emergency expenses.
As a result, customers in Districts I, VI and VII — Washington, Chocowinity and Richland townships — would have faced recommended rate increases in the coming fiscal year. Customers in Districts II and III — Long Acre West and Long Acre East — would have faced rate increases within the next two fiscal years.
And customers in Districts IV and V — Bath and Pantego townships — would have possibly faced a special levied property tax to improve the cash flow in those districts, the commissioners were told.
To reduce the debt payments, county officials had researched options for reducing the interest on the debt — which stood at 5.33 percent — but the lack of liquid assets and the poor financial condition of each district made investors hesitant.
But the recent introduction of limited obligation bonds allowed the county to pursue the option of refinancing the debt owed by the water districts, McRoy said.
As a result, the county was able to reduce the interest rate on the debt to 3.85 percent, he said.
That will result in a savings of $6.94 million over the life of the bonds including a savings of $3.7 million in the first five years and $1.5 million in the 2013 fiscal year.
Because of these savings, the cash balances in the seven water districts will grow from an estimated $1.09 million in the 2012-2013 fiscal year to $4.86 million in the 2017-2018 fiscal year.
That’s good news for the county’s water customers, McRoy said.
“This helps our cash flow tremendously,” he said. “So instead of having to vote next year for a rate increase, this gives us some cushion.”
In a related matter, the commissioners voted unanimously Monday to enact budget amendments reflecting the reduced debt payments.
The Beaufort County Board of Commissioners took action on a variety of issues Monday night. In other action, the board:
Voted unanimously to award a contact to Utility Service in the amount of $111,600 for the painting and maintenance of a water tank in Ransomville.
Turned back — by a vote of 4-3 — a request from the Beaufort County Sheriff’s Office to buy two vehicles for its Narcotics Division with some $51,800 in Drug Asset Forfeiture Funds. Commissioners Stan Deatherage, Hood Richardson, Ed Booth and Al Klemm voted against the request.
Voted unanimously to approve a grant application for $20,000 in funds from the N.C. Department of Agriculture for stream debris removal for Rowland Creek in the Pantego area.
Voted 5-2 to approve $13,431.55 in travel requests with Commissioners Deatherage and Richardson casting dissenting votes.
Voted 5-2 to approve an agreement between the Beaufort County Health Department and Pitt County that would enable the county to recoup up to $8,000 in costs for work performed by the department on a project to promote healthy eating and living and reduce tobacco use. Deatherage and Richardson cast dissenting votes.
Made the following appointments to the Richland Township Fire and Rescue Advisory Board: Pat Bragg, Curtis Ormond Sr., David Rusevlyan and Hyram Paul of Aurora and Charlie Cutler of Edward.
All commissioners attended the meeting.