County saves nearly $3 million by refinancing utility bonds

INDIAN RIVER COUNTY — The County government has refinanced $28 million in utility bonds taken out in 1993 to build the infrastructure of the water and sewer systems in an effort to save cash and keep rates low.The deal was possible due to an upgrade of the utility’s bond rating by two major rating firms, Standard and Poor’s and Fitch. Jason Brown, director of the County’s office of management and budget, said the transactions will save the water and sewer utility an estimated $260,000 per year in debt repayment, or, amortized over time, just under $3 million in future cash flow value.”It’s like refinancing your home, interest rates are low and we went to the market and re-funded the bonds at a significant savings,” Brown said. “The good credit of the County helped us secure a very low interest rate, an average a rate of 3.75 percent.”The money saved will be used to fund expenses of the utility, therefore keeping rates low for its estimated 45,000 customers. According to the statements released from S & P and Fitch, the County was able to achieve the higher bond rating due to sound fiscal management and the fact that the utility has 727 days — nearly two years — of operating cash on hand, which is a major factor the bond market looks at when determining how safe a government or utility is as an investment. Another factor in the rating was the fact that the County has no plans to raise water and sewer rates in the near future.The lack of operating cash on hand in the coffers of the City of Vero Beach electric, water and sewer utilities has been a topic of discussion and concern as the City tries to raise rates and recover revenue to shore up the financially struggling utilities. The County’s utility bonds were upgraded from “A” to “AA” with S & P and from “A” to “AA+” with Fitch Ratings. The S & P rating is the third-best rating of 22 categories and the Fitch rating is the second-best rating of 22 categories.

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