Benton-Washington Water Authority Saves Money Through Refinancing

AVOCA -- The Benton-Washington Regional Public Water Authority minimized the need for a water rate increase for future projects by refinancing its debt, said Scott Borman, authority general manager.

"This is a good deal," Borman said. "It saves us money."

The authority's board approved refinancing about $47.8 million and avoid a step in annual payments that had been expected around 2026, said Bob Wright, senior managing director for Crews & Associates, which handled the refinancing.

Wright said the authority expects to save nearly $3 million by refinancing now.

Refinanced debts includes a 2007 bond series used to expand the water treatment plant, an Arkansas Natural Resources Commission lease and reclassifying and refinancing debt to the U.S. Army Corps of Engineers.

Refinancing the debt will not increase the time frame for payments, and lowers interest rates, Wright said. Refinancing also means annual payments will stay the same.

In 2007, the authority -- like the rest of Northwest Arkansas -- expected massive growth to continue, Borman said. The authority agreed to an increasing payment schedule, but the recession stalled growth, Wright and Borman said. Without the most-recent refinancing, payments were to go up $314,510 from 2025 to 2026, Wright's records show.

Board members and Borman said Wednesday they expect the savings to mean the authority can pay for maintenance needs, such as water storage painting, without loans. The saved money will benefit cities using the water, said David McNair, board chairman and Gentry representative.

"The money that we save saves money for the customers because we won't have to do the rate increase -- that's the important deal -- the savings for our customers," McNair said.

The authority serves 15 cities and the Washington Water Authority in Benton and Washington counties, according to its website. Wholesale water rates are $2.15 per 1,000 gallons of water purchased with a $1.50 assessment per active water meter for each wholesale customer, according to the resolution approved Wednesday.

The authority's credit rating, an A minus, and cash flow will improve, thanks to the refinance, Borman and Wright said. That will serve the authority if it seeks bonds for major improvements, Wright said.

Board members have been considering a multimillion dollar project to meet water demand for the authority's southern-most customers over the long term. The Wildcat Connection is expected to cost $8 million and means a probable water rate increase, Wright said.

Borman said previously he expected a water rate increase of about 10 percent, but Wright said refinancing debt means much less of an increase. No numbers were available for a potential increase Wednesday.

The Wildcat Connection would include a new booster pump station and a 24-inch diameter water line, according to the report by Crist Engineers. Water would go to the Washington Water Authority, which would operate and maintain the line, Borman said previously.

Board members are still considering options, Borman said. The next meeting is Oct. 23.