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April 10, 2013

Money sense paying off for sewer authority

NORTHERN CAMBRIA — West Branch Sewer Authority is reaping the benefits of its exemplary Standard & Poor’s rating by finding $833,000 in potential savings through bond refinancing.

The money will go to settle the authority's 1996 U.S. Department of Agriculture bond, which paid for the initial West Branch sewer system.

The authority’s “A-stable” S&P rating – which authority Solicitor Bill Barbin said is much higher than Cambria County’s rating – means they’ll see a much better return from selling the bond.

He said the authority will be able to keep the same payment amounts and pay schedule.

“We can finance it at a much lower rate now than they borrowed from the federal government in 1996,” Barbin said. “It’s mainly because they’ve maintained a reserve fund and they were able to show S&P they’re financially conservative.”

According to Barbin, with a lesser rating, the savings would have been much less – around $300,000.

While unexpected revenues might lead residents to expect lower service rates, Barbin said the authority will stick to its careful budgeting.

“This will go to an emergency fund to cover future repairs and protect against future rate increases,” Barbin said. “We won’t be raising rates for years and years. I won’t say that for most authorities, but I will for this one.”

The authority gave approval for its underwriter to sell the bond, which they will commit to on April 20, as long as the net value savings incurred would be at least $650,000. Barbin said he’s almost positive it will go through for more than that amount.


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