Over the past 18 months, The Blue Lake Springs Mutual Water Company successfully progressed through the USDA Loan Pre-Application & Feasibility Report (Aug 2015), Preliminary Engineering Report (July 2016) and Loan Application (Dec 2016), which culminated with our USDA Loan approval on Dec 27, 2016. By obtaining the approval prior to 2016 year-end, we were able to lock in an extremely low interest rate of 1.875% over a 40 year term. This is a huge accomplishment that will benefit our community for decades.
Why is this Needed?
The USDA Loan Project will be replacing deficient water mains, and installing upgrade water system appurtenances including fire hydrants, pressure reducing valve stations, and booster pump stations throughout which is less than 2/3 of the BLS Development that do not meet industry standards. In addition, to meet state mandate, we will be installing new water meters, pressure regulators and boxes to 100% of the residences.
Benefit to Shareholders:
Does not require a large up-front out-of-pocket assessment, but spreads costs over the next 40 years so that current and future home owners pay their proportional share of the costs. As documented by the American Water Works Association “An advantage of using long-term debt is that it results in a better matching of customer’s charges with the use of the facilities so that existing customers will not be paying 100% of the initial cost of facilities that will be used for many years”
The LRPC is in the process of completing analysis on the impacts to shareholder’s rates. The repayment of the USDA Loan will be covered through annual surcharges. More information on this will be made available to the shareholders in a presentation at our April 2017 Special Meeting.