King County’s Wastewater Treatment Division issued $494 million worth of new sewer revenue bonds today at a rate of 3.79 percent. The total savings to county taxpayers from the refinancing is projected to be more than $70 million, or about $3 million per year, through 2034.
“King County’s strong credit rating means we can sell bonds at low interest rates and keep our costs down,” said King County Executive Dow Constantine. “I am pleased that, even in a time of economic uncertainty, our track record of strong financial management allows us to issue bonds at a rate that will save tens of millions of dollars as we invest in our region.”
Most of the proceeds will be used to refinance $458 million of outstanding sewer revenue bonds that were issued in 2001, 2002 and 2004. The remainder of the bond proceeds will be used to fund the completion of the Brightwater Treatment Plant project and other capital improvements.
Credit rating agency Standard & Poor’s (S&P) reaffirmed its AA+ rating of the utility’s sewer revenue bonds. S&P cited consistent financial performance, the King County Council’s willingness to incrementally raise rates and connection charges to meet financial obligations, and a robust economic base that retains strong underlying credit fundamentals despite a period of slow growth.
Moody’s, another credit rating agency, also reaffirmed an Aa2 rating based on the utility’s continued sound management practices, the system’s large and economically diverse service area, continued progress on a large and complex capital improvement plan, and satisfactory debt service coverage.
The credit ratings lower the annual costs to borrow money that is repaid by ratepayers through monthly sewer rates and charges. The County Council recently voted to preserve the current sewer rate of $36.10 through the end of 2012 and set the monthly capacity charge paid by newly connecting customers at $51.95.
Many projects that will be funded by today’s bond issuance are being carried out as part of the Regional Wastewater Services Plan, a 30-year comprehensive plan adopted by the County Council in 1999 to ensure the regional sewer system keeps pace with population growth.
In addition to providing infrastructure to support long-term economic growth, the projects create jobs that stimulate the economy. It’s estimated that for every $10 million the county utility spends on construction, about 140 full-time and part-time jobs are created with a payroll of $5 million.
The economic boost comes in addition to the cumulative $1.2 billion in direct construction spending on the Brightwater project from 2006 to 2011, which created close to 3,800 full-time and part-time jobs per year with an average annual payroll of over $88 million. The Brightwater project is scheduled for completion in 2012.
