KINGMAN - The city of Kingman can extend or consolidate nearly $50 million in loans it took out to pay for upgrades to a pair of wastewater treatment plants a few years ago. Doing so would give the city some cash, but not without taking on substantial additional debt in most cases.
That was the message Finance Director Tina Moline sent Tuesday night, about a month after Mayor Richard Anderson directed her and her staff to research the possibility in light of lower interest rates and a change in state law.
Moline, who presented her findings without advocating for any of several examples she provided, said the city owed more than $26.3 million left on a $33.8 million loan it took out to fund significant upgrades to the Hilltop Wastewater Treatment Plant. The loan is scheduled for payoff in July of 2028. She said another $12.5 million is owed on a $14.5 million loan used to upgrade the Downtown plant that will be paid off in 2030.
Anderson's motivation to ask for Moline's input was twofold. State lawmakers this past session passed legislation that requires the Water Infrastructure Financing Authority, from which the city obtained its sewer funding, to renegotiate its loans with public entities. WIFA also is offering an interest rate of 2.5 percent.
Moline pointed out the current loans' interest rate is 3.6 percent. If the city restructured the loan with the lower rate, it could save money in interest payments or it could free up cash to fund other improvements to the system.
"What do you want?" she asked. "Cash flow or low interest?"
Moline pointed out the city carries no debt on its water plants, which is good, but WIFA loans come with restrictions since the agency must follow the federal Clean Water Act. Also, WIFA is likely to approve an early payoff after the city pays on the loan for a minimum of 10 years and commits at least $2 million. The loans are considerably less than 10 years old.
Councilwoman Jen Miles said there was only one possibility she would consider, which would have the city extend the Hilltop loan for two years. "That would save us some money," she said. After the meeting, Miles indicated she would not consider any other possibility, as it would add too much debt. She made it clear she was speaking for herself, but no other member of the Council advocated any of the scenarios outlined by Moline, who made it clear any option would come with a price to pay.
No action was taken and Council members did not request staff to continue its research or discuss holding a workshop to discuss the issue further.
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