In a move that could delay the rise of water and sewer rates for residents on the west side of Hidalgo County, North American Development Bank approved a $13 million debt refinancing project for the Agua Special Utility District.
On Thursday, the NADB board of directors approved the project for Agua SUD to refinance existing debt.
“Basically, there were some loans that qualified for refinancing so we bundled about five, I believe it was five, loans together that were from other entities like USDA and Water Development Board,” said Agua SUD General Manager J.E. “Eddie” Saenz. “And that had interest rates in the range of 5% give or take.”
Through the refinance package form NADB, the utility district was able to secure a rate of 2.9%.
“So what we’re doing is basically refinancing to reduce the principal payment and save over the life of the loan,” Saenz said.
This is expected to result in roughly $140,000 in savings for Agua SUD during the first 13 years of amortization, according to a news release issued by NADB.
This is the first such project approved by the NADB board of directors as part of their two-year COVID-19 Recovery Program (ProRec).
ProRec was approved in May in response to the COVID-19 pandemic and is meant to support projects that have “both environmental benefits and direct positive impacts on the economy and the health and well-being of border residents in both countries,” according to the news release.
“The objective of the umbrella program is to expedite the approval of refinancing proposals for public entities that meet the eligibility criteria in order to free up cash flows that can be redirected to support public services and mitigate the effects of the pandemic,” Calixto Mateos-Hanel, the NADB managing director, stated in the release.
Saenz acknowledged the utility district saw a decrease in revenues after they began waiving payment processing fees so customers could save money.
Agua SUD also had unexpected expenses — totaling between $12,000 to $15,000 — for additional sanitizing, COVID-19 tests that Saenz said they randomly administered to their employees, and other safety procedures, such as installing a plastic partition.
“We had some financial impact in regards to that, the measures that we took to make sure we (had a) safe working environment,” Saenz said. “But we were able to overcome it and get back on track.”
He added that the money saved will help them maintain and sustain growth without having to impact their customers by raising rates.
“Not saying we’re doing that, but in the near future, as growth comes, obviously costs go up as well,” Saenz said. “But this will help us save some money and put that into the coffers.”