Nashua refinances 13 loans, saves $2 million
NASHUA — The city of Nashua recently refinanced 13 loans to save the community more than $2 million, which could mark the beginning of a new trend for New Hampshire municipalities.
“This is significant,” said Paul Heirtzler, administrator of the state’s Wastewater Engineering Bureau.
Nashua has 13 wastewater loans from the State Revolving Fund that is managed by the New Hampshire Department of Environmental Services and administered by the Environmental Protection Agency.
When city officials were preparing to refinance the loans, which total about $28.3 million, they asked whether DES could handle the refinancing.
“No one ever asked us before,” said Heirtzler, adding representatives from the State Revolving Fund contacted EPA managers to find out if it was feasible.
While there are a few states that do allow their State Revolving Funds to personally refinance loans, including New Hampshire, no communities in New England have ever taken advantage of that opportunity, Heirtzler said.
“The State Revolving Fund has below market interest rate loans, and we don’t have any closing costs,” he said, explaining there is a small window of opportunity before the historically low interest rates are adjusted the first week of October.
The city’s financial adviser assisted the state with the process, and DES now has a few communities that are requesting refinancing, according to Nashua Treasurer David Fredette.
The city will be saving $2.24 million over a 17-year period, and the majority of the savings will be seen in fiscal year 2015 through fiscal year 2021, Fredette said in an email.
About 58 percent of the savings will be in the city’s Solid Waste budget, and 42 percent in the city’s Wastewater budget, according to Fredette. The interest rate prior to refinancing was 3.55 percent, which was lowered to 2.16 percent.
“The amount of the outstanding loans is (now) $25,922,939,” he said.
While a lot of research went into making the refinancing possible, Heirtzler said it is clearly permitted, and other municipalities are investigating their options. The communities of Portsmouth, Concord and Durham have already expressed interest, and Heirtzler said he is in the process of reviewing their portfolios.
Earlier this year, about $21 million in city bonds sold competitively at incredibly low interest rates and saved the city nearly $2 million. Those general obligation bonds and existing debt was sold with a record 2.43 percent interest rate.
“Over the last two fiscal years, the city has been able to save nearly $4.5 million dollars in real cost to the city and the taxpayers,” Fredette said this week.