Stimulus Funds Accelerate Stormwater Projects

Meetings with elected officials in Washington, D.C., and Austin; close coordination with federal and state funding agencies; and creative thinking by financial advisors and staff finally paid off for El Paso Water Utilities. Stormwater projects that were once scheduled to take place over the next three years will now be completed in two years or less – and with substantial savings to EPWU’s ratepayers.

“We submitted numerous requests through various agencies,” said Vice President Nick Costanzo. “We’ve been aggressively looking at EPA funds, the Department of Energy and any grant opportunity that’s out there. Any creative way we can get access to the stimulus funds or discounted funds, we’re doing it."

Nearly $15 million in revenue bonds will be issued to pay for six stormwater projects. The bonds will be purchased by the Texas Water Development Board using federal stimulus funds. The funding will be in the form of 20-year, no-interest loans, which will save ratepayers $8.6 million in interest costs.

The remaining projects in the three-year capital program will be financed with Build America Bonds that will be sold to the North American Development Bank (NADBank). These municipal bonds were created under the stimulus program to reduce the cost of borrowing for state and local government agencies.

Although the bonds are taxable, the U.S. Treasury Department will refund 35 percent of the interest paid to NADBank. The net effect is a borrowing cost that is 1 percent less than the open market rate. Ratepayers will save $7.2 million over the next 20 years.

Costanzo points out that there are advantages to partnering with NADBank on the stormwater projects. “These three years of projects will protect over $1 billion in residential and commercial property. By accelerating the program, we’ll be able to do them in a year and a half to two years instead of three years,” he said.

“We’ll increase public safety to the city while locking in this bond issue and moving forward, so it’s El Paso’s own stimulus program along with the national initiative. The bonds are also callable at any time, so if we get a lower interest rate or another opportunity or grant, we can call these bonds and pay them off. That’s very unique.”