Santa Clarita / Antelope Valley : Water Agency Cuts Debt $26.8 Million : Resources: Wholesaler refinances a capital improvement loan, reducing the interest rate from 7.26% to 6.23%.
The Castaic Lake Water Agency has trimmed $26.8 million off future loan payments for the construction of the Rio Vista Water Treatment Plant.
Officials of the water wholesaler have refinanced a $132-million capital improvement loan the agency took out in 1990, cutting the loan’s interest rate from 7.26% to 6.23%. The lower rate covers the entire 30-year term of the loan, cutting the agency’s payments by $26.8 million.
New residents and businesses may benefit from the move, but current water customers won’t see any savings, according to Robert Sagehorn, CLWA general manager.
“It will not reflect in water rates, but will forestall the raising of connection fees,” Sagehorn said.
New homes and businesses pay a hookup fee for water service, based on a projection of how much water they will use. Although connection fees vary widely, they now average about $3,000, Sagehorn said.
In addition to the refinancing move, the water agency also freed up $11 million initially used to insure the loan. The agency no longer needs to put that money in reserve because of its consistent payment record since 1990. A portion of the $11 million has been used to pay off $4.7 million of the loan’s principal, Sagehorn said.
CLWA officials plan to pay off the water treatment plant loan and other debts with future property tax increases, and have filed two lawsuits against Santa Clarita to stop the city from spending the money elsewhere.
The Santa Clarita City Council in February adopted a redevelopment plan that would use the future tax increases for Northridge earthquake recovery projects and to improve streets and other infrastructure needs, rejuvenate blighted areas and build affordable housing.
Both lawsuits say the redevelopment plan illegally claims to be a disaster recovery plan and actually goes way beyond recovering from the Jan. 17 earthquake.
The first lawsuit was rejected last month and the second legal action is still pending.