FARMINGTON -- Wasatch Energy, operator of the Davis and Morgan county burn plant and landfill, has approved a special capital restructuring plan and bond refinancing effort that could save the special service district $3.1 million.
At its monthly administrative board meeting Wednesday in the Davis County Courthouse, unanimous approval was given to the financial plan.Besides its long-term savings, Wasatch will also cut three years off its bond payments and will retire its bonds in the year 2006.
Davis County Commissioner Carol Page, who serves on the Wasatch board, said this is a very nice Christmas present for county residents.
Despite the savings, no immediate reductions are planned in tipping fees -- the cost of dumping at the burn plant and landfill.
District Executive Director LeGrand Bitter said the plan basically involves paying off Wasatch's mortgage three years sooner than planned.
He said the principal and interest reductions will result in long-term savings and should mean consumers will see decreases in tipping fees three years sooner.
"It's a tremendous restructuring by the district," he said.
Burn plant manager Jack Schmidt said this is the latest positive development in the district that has previously included a new landfill and plant upgrades. "I don't know what we can do for an encore," he said.
District Finance Director David Van De Graff said the restructuring is a one-time thing than can be done. "It's a bird in the hand. We ought to take it," he told the board.
The complicated plan involves taking $15.9 million out of district reserves and placing them in a trust fund. Their profits will pay for all legal fees on the refinancing, and eventually they will help pay off the bonds early.
The district is refinancing $43 million of its 6 percent interest Series 1993 bonds. They'll end up being $31 million of Series 1999 bonds at approximately 4 percent.
Exact savings on the bond refinancing will depend on the interest offered at the time of closing.
District Board Chairman Jerry Stevenson, Layton City's mayor, said he's happy to see Wasatch finally use a large portion of its reserve money.
He said he's often asked by Layton residents why Wasatch needs so much money in reserve. "It will probably take away the No. 1 question I'm asked," he said.
Stevenson said the financial effort will also take away the $10.2 million balloon payment the district would have faced in the year 2009.
Despite the big reduction is district reserve funds, Schmidt said he believes there's still adequate money available for emergencies, with a remaining reserve fund of $4.3 million. "I can't see anything that won't cover," he said.
Schmidt said the district has rarely had to use its reserve fund. In fact, the only time was in 1993.
The new financial plan was extra good news, because last month the district had hoped to only save some $1.5 million by simply refinancing its bonds.