Modesto Irrigation District to consider refinancing pricey loan

gstapley@modbee.comJuly 8, 2013 

    alternate textGarth Stapley
    Title: Reporter
    Coverage areas: Regional water, growth, land-use and transportation; civil law, real estate fraud and special projects
    Bio: In his 19 years with The Bee, Garth Stapley has focused on city and county government

Refinancing a loan on a water treatment plant should save about $4.7 million over the next decade, say Modesto and Modesto Irrigation District officials.

The partners still owe $52.6 million on bonds used to build the $120 million plant, which began delivering tap water in 1995. City Hall pays down $6.6 million each year.

Interest rates on such loans bottomed out late last year and have begun to rise, prompting advisers to suggest that the partners hurry to obtain favorable refinance terms. The new deal would save about $500,000 a year.

"Lower debt service on the bonds translates to cost savings for the Modesto water ratepayers," reads a city report. Specifics on how customers might be affected, however, were not mentioned.

The MID board will consider the item during a 9 a.m. meeting today at the district office, 1231 11th St.

City Council members will review the same proposal at 5:30 p.m. today in the basement chamber at Tenth Street Place, 1010 10th St..

The proposal has nothing to do with recent troubles related to a botched plant expansion. Errors pushed the price of the expansion from $82 million to $105.4 million, and the completion date from 2009 to 2015.

Also on today's MID agenda:

• A special report on how the district coped with last week's high temperatures

• An update on the district's "power content label," a public disclosure showing how much electricity the MID gets from its various sources.

The MID's reliance on renewable energy has increased in recent years in response to a state mandate that utilities get at least 33 percent from green sources by 2020. For example, windmills generated 10 percent of the district's electricity in 2009; investing in more has bumped that to 23 percent, while the average California utility gets 5 percent from windmills.

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