The City of Boise will be able to access a federal program to get government-backed loans for planned improvements to the city’s sewer infrastructure.
Last month, voters approved a bond that authorizes borrowing up to $570 million for what the city says are needed upgrades to wastewater infrastructure. Now, with loans from the Environmental Protection Agency’s Water Infrastructure Finance and Innovation Act, the city will be able to get loans at a lower interest rate than it could in the traditional bond market.
“As we said before the bond campaign, the council and my office is committed to making smart decisions along the way as we modernize our water renewal program,” Boise Mayor Lauren McLean said. “This will make it possible to make to do these projects at even lower rates that we’d projected.”
City officials say the bottom line is it will mean lower rate increases for homeowners. Passage of the bond meant sewer rates would increase 9.9% for the average customer in the city starting next year — and even with the new program that will still be the case. The city said during the bond campaign that rates would continue to rise an average of 10% each year on a compounding basis going forward – but the loan program could mitigate some of that.
“The modeling that we did when it comes to resident rates – we expected was based on higher bond interest rates,” McLean said. “That’s where the savings will come in for residents.”
Boise Public Works Director Steve Burgos told BoiseDev the EPA-backed loans feature a 2% interest rate – which is lower than the private bond market which could be between 2.5% and 3%, and rise in future years. The EPA interest rate will stay flat.