Los Angeles Board of Water and Power commissioners approve low-interest loan for water system
Loan will save customers more than $9 million and continue the mission of the Los Angeles Department of Water and Power (LADWP) to keep rates low while providing the highest level of service.
LOS ANGELES, March 1, 2016 -- The Board of Water and Power Commissioners today approved a request by the Water System to enter into an agreement to obtain a low-interest loan that will save customers more than $9 million and continue the mission of the Los Angeles Department of Water and Power (LADWP) to keep rates low while providing the highest level of service.
The loan was approved in a financing agreement with the California State Water Resources Control Board (State Water Board). A total of $31,839,032 will come from the Safe Drinking Water State Revolving Loan Fund (DWSRF), which will provide financing to the Elysian Reservoir Water Quality Improvement Project for eligible costs under the DWSRF program. A total of $9,102,980 will come in the form of interest savings.
“We are extremely pleased to obtain this low-interest financing, which will allow the Water System to meet our regulatory requirements, bolster our water quality infrastructure, and keep costs low for our customers,” said Marty Adams, senior assistant general manager for the Water System.
With an interest rate of 1.6 percent, payable over 20 years, the DWSRF financing is an attractive alternative to borrowing from Water Revenue Bonds, the alternative financing mechanism for Water Quality Improvement Projects. If the Water System had financed the Project through Water Revenue Bonds at the current rate of 3.97 percent for 20-year, tax-exempt bonds, the total Project cost, including interest payments, would be $46,433,599. The $9 million savings achieved through DWSRF financing represents savings on interest.
The DWSRF financing obtained by the Water System came about after a rigorously competitive process conducted by the State Water Resources Control Board that evaluates the technical, managerial and financial capability of public utilities like the LADWP.
The Project, which was approved on April 17, 2012, consists of placing a floating cover on the reservoir in order to comply with federal and state requirements enacted to maintain the highest level of water quality.
Created by the Federal Safe Drinking Water Acts Amendments of 1996, DWSRF provides low-interest loans and other assistance to public water systems to ensure public health protection and compliance with drinking water standards. To date, the LADWP has been awarded a total of $956,515,675 from DWSRF.