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King County bond refinancings save $37.3 million for sewer utility ratepayers

Summary

Sewer improvement projects that safeguard the environment protect, public health, and support economic growth will now come with the benefit of a lower price tag.

Story

Sewer improvement projects that safeguard the environment protect, public health, and support economic growth will now come with the benefit of a lower price tag.

In June and July, in two separate bond sales, King County’s Wastewater Treatment Division, or WTD, refinanced $271 million in sewer revenue bonds, which will save the utility $37.3 million.

The bond sale completed on July 21 will achieve approximately $32 million of savings over the next 20 years based on an interest rate of 3.36 percent. A previously completed bond refinancing of $75 million on June 30 resulted in $5.3 million of immediate cash savings based on an interest rate of 4.2 percent for bonds with an average life of 30 years. Since 2000, various refinancings of King County’s bonds have saved the utility almost $300 million.

The savings are a result of the utility’s strong credit ratings and WTD’s ability to identify financial opportunities. In June, Moody’s and Standard & Poor’s affirmed their respective ratings of WTD’s sewer revenue bonds at Aa2 and AA+, citing the utility’s strong management practices, consistent financial performance and bright regional economic outlook.

Each year, King County's wastewater utility borrows money to fund its capital improvement program by selling sewer revenue bonds. Higher bond ratings help the county secure a lower interest rate on its bonds, which are paid back through current and future monthly sewer rates and charges. The exemplary bond ratings also allow the utility to refinance its debt at lower interest rates, resulting in debt service savings over the life of the bonds.

The utility is now at the halfway point of a 30-year comprehensive plan adopted by the King County Council in 1999. Major projects completed under the plan to date include the $1.8 billion Brightwater Treatment System Project, new and upgraded pump stations in Kirkland, Bellevue, Pacific and Shoreline, and several pipeline expansion and replacement projects.

In 2014, King County has budgeted $148.3 million in capital improvement projects to expand the wastewater system, modernize existing facilities, and ensure continued compliance with environmental laws.

Additional information about the utility, its service mission and its finances is available on the Web at http://www.kingcounty.gov/ratepayerreport.



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