SYRACUSE -- A timely decision will save the North Davis Sewer District millions of dollars.
The district refinanced the bond for a 2009 plant expansion to save the district an estimated $2.5 million in interest over the next 14 years.
"As a board, we're always looking for any way we can save money for the taxpayers, those who live in our district, who are our bosses," said Ryan Furniss, a Sunset City Councilman who is sewer district treasurer.
"We look at every way to save money. When this situation presented itself, we felt responsible to take action on it and save our taxpayers money."
The original bond was for $15.425 million with an interest rate of 3.9 percent, so the district was paying close to $629,000 per year. Refinancing got the bond down to $14.6 million at 2.47 percent, so now the district will pay close to $461,000 per year in interest.
Board member Andy Dawson, of the West Point City Council, said the district's finance banker, George K. Baum & Company, approached the board in October. The investment bankers told the board that it was a great time to look at refinancing the bond.
"We talked about it," Dawson said, "and we were very interested at the time."
With the low interest rates, the board figured now was a good time to refinance.
"It's always kind of a gamble," Dawson said. "If you wait too long, the interest rates can do the exact opposite and go up."
On Feb. 9, Furniss, district manager Kevin Cowan and district chairman Ivan Anderson met with George K. Baum & Company. Furniss said he could not believe what happened when they looked for bidders willing to refinance the bond.
"We watched them go out on national market, and in 30 seconds, we had 15 national bidders competing for us," Furniss said.
He said they went with the lowest interest rate, which came as the result of the district's impressive long-term credit rating -- a AA rating by Standard & Poor's and an impressive AA+ by Finch Ratings.
The reason behind the high ratings is the healthy reserve fund by the district, Furniss said.
"A lot of our critics have asked why we have such healthy reserves," he said.
"One of reasons is to have a good rating. Our creditors know we will be able to pay back the bonds."