The Agua Special Utility District will save millions in paying back several loans that go as far back as 1995.
The water agency announced they refinanced seven loans totaling $17,470,500 into one loan totaling $12,995,000.
The original loans had an average interest rate of about 5% each. The new, single loan has an interest rate of 3%. According to the district, a total of $12,712,240 outstanding principal was left over from the combined loans.
“It’s going to save the district millions of dollars to put back in our coffers over the 28-year lifespan of this loan,” Agua SUD General Manager Jose E. “Eddie” Saenz said. “It will save us on principal payments in the new year because we got a lower interest rate.”
The oldest loans were first issued by the USDA in June 1995 and totaled $2,367,000. The most recent loan was issued July 2008 by the Texas Water Development Board and was valued at $2.5 million.
“These loans weren’t eligible for refinancing until recently and we sent them to the North American Development Bank lending agency for the refinancing,” Saenz said. “This prior debt had been in the books for years and were likely used for infrastructure improvements throughout the district.”
Starting on Monday, the district will start making annual payments of $585,964 to NADBank through Aug. 1, 2049. In that time, the district is expected to pay more than $16.9 million in total principal and interest.
“By financing it at a low interest rate, we are putting out less payments over time,” Saenz said. “we’re looking to reduce our debt payments and when we see an opportunity to do that with low interest rates, we take advantage of that.”