Sandpoint refinances sewer bond

SANDPOINT — An ordinance passed by council members Dec. 7 will save the city approximately $1 million and five years of payments on its sewer revenue bond.

In 2007, the city borrowed money from the Idaho Bond Bank Authority to finance its sewer project and currently owes $4,230,000. Refinancing the city's sewer revenue promissory note decreases the interest rate and accelerates the term of the debt.

After the 2007 promissory note was issued, the bank then sold bonds on the market to investors who were backed by the repayment obligations that Sandpoint had to the bank, said Laura McAloon, the city's bond counsel, during the Dec. 7 meeting as she filled in council members who were not present during the 2007 agreement.

"So there were two tiers of loans in there," McAloon said. "There's the loan from the Bond Bank Authority to the city, and then the loan from the bond holders on the open market to the Bond Bank Authority that provided the funds for the Bond Bank Authority to lend to (the city)."

After receiving refinancing proposals from five different banks recently, City Council decided in November to refinance through Columbia Bank with an interest rate of 1.69 percent. The loan matures on Sept. 15, 2022. With interest rates on the previous loan ranging from 4 percent to 4.25 percent, the maturity date spanned to 2027.

"You've obtained some significant savings through this refinancing," McAloon told the council, adding that the loan agreement is scheduled for closing on May 14.