WASA using historically low interest rates to refinance bonds

Sarah Fay Campbell / The Newnan Times-Herald

Coweta Water and Sewerage Authority CEO Jay Boren, at table, speaks about the proposed 2021 bond issuance. Standing is bond consultant Trae Monroe.

Thanks to interest rates at near-record lows, the Coweta County Water and Sewerage Authority will be able to refinance all of its existing bonds into a new, 2021 bond issue.

The bond package will pay off – or “defease” – all existing bond issues, and include $17 million in funding for new projects.

The interest rate will be even lower thanks to the authority’s recently improved bond rating. The bond rating – essentially the authority’s credit rating – went from AA to AA+.

With AA+ there’s only one possibly higher rating – AAA.

The bond rating upgrade “is a result of a sustained practice of good policy and management by the staff,” said Trae Monroe, bond consultant with Stifel Public Finance.

“Y’all have very, very strong financials and have consistently demonstrated over time that you can handle those financials,” he said. That management, coupled with strong growth and a strong economy in the authority’s service area, led to the increase.

The authority’s financials didn’t take much, if any, of a hit from the COVID-19 pandemic, according to Monroe.

With the new funding, and thanks to the low interest rates, debt service will go from around $6 million per year to $6.5 million per year, Monroe said.

The bond rating upgrade means a savings of about $1.5 million over the life of the bonds, he said.

The bonds will be issued within the next few weeks, when the timing is best. The authority board will have to meet in a called meeting to sign the final paperwork. The final total of the bonds won’t be known until the bonds are sold, Authority CEO Jay Boren said, but it will be approximately $96 million.

The bonds to be defeased include the series-2005 bonds, which were issued before the authority was spun off from Coweta County as a mostly-independent body.

Though the authority has refinanced many bond issuances over the years, they’d never been able to defease the 2005 bonds, because the rate on those bonds was very low, Boren said.

The county – and its taxpayers – would have been responsible for those bonds if the authority were unable to pay them.

“After this issue, the county will be off the hook for that 2005 issue,” Boren said.

The 2021 issue will also defease the 2014, 2015, 2016, 2017 and 2019 bond issues.

The new funding will pay for four new projects. The biggest is the upgrade to the line from Griffin, estimated to cost $10.8 million. The authority will have to begin buying larger amounts of water from Griffin in 2022, and the current line isn’t big enough to carry that much water.

The other projects are utility relocation for a proposed road improvement on Sullivan Road, and sewage tie-ins for the Wesley Woods area and the Woodstream subdivision. Those two areas have long been served by Newnan Utilities for sewer, though they are in the county.

In 2019, the authority and Newnan Utilities approved a new contract for water purchases. The contract also included the authority taking over those two sewer service areas, and giving the authority three years to run the lines to connect the areas to the Shenandoah Wastewater Treatment Plant.

“For us to be able to put that much more assets in the ground, to get the better rating that we got, and to be able to make very minimal changes to our debt service, is just a win-win,” said Authority board member Mark Woods. “It’s a win for our ratepayers, it’s a win for our authority, it’s a win for the county – it’s good for all of us” he said. “For the people who run this place … they’re just doing a great job.”

The authority staff practices good stewardship, and this is another example, said Chairman Eric Smith. “It’s another example of the seriousness of that responsibility that they have,” “They’re always looking for an opportunity to decrease cost and become more efficient.”

The authority is also expanding the Shenandoah Plant. That expansion will be funded with loans from the Georgia Environmental Finance Authority.

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