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Middleton council authorizes mayor to prepay USDA loan up to $2 million
Summary
The council authorized the mayor or his designee to pay off an existing USDA loan for the wastewater treatment plant — up to $2,000,000 — to avoid delays in a planned bond sale and reduce long-term interest costs; the motion passed unanimously.
Middleton’s City Council voted April 1 to authorize the mayor or his designee to make a final payment of up to $2,000,000 to prepay a U.S. Department of Agriculture loan tied to the city’s wastewater treatment plant.
Jason Ben Gilder, who identified himself to the council as Jason Ben Gilder, corporate board director, said federal review of paperwork needed to place an existing loan on parity with a new bond could delay the city’s planned Idaho bond bank sale in May. As an alternative, he said, the city could pay off the older loan so the bond sale could proceed on schedule.
Wendy Miles, introduced by staff as the city treasurer, told the council the funds were available in city savings and that paying off the older loan would come from those reserves. “That original bond we took out in 2013 is a 30 year bond. It’s at 2.75% interest,” Miles said, and staff said the payoff amount would be just under $2,000,000.
Staff estimated an interest savings from payoff: “In paying it off, we will save $546,136 in interest that we would not pay by carrying this out to the year 2043,” staff advised the council.
Council members asked whether paying the loan now would affect the size of the future bond or the city’s ability to borrow later. Staff responded that prepaying would reduce savings by roughly $2 million and therefore could increase what the city needs to borrow later, but that authors of the plan had budgeted for the payoff this year.
A council member moved to authorize the mayor’s designee to make the payment in an amount not to exceed $2,000,000; the motion was seconded and approved by voice vote.
The council’s action authorizes the mayor, in consultation with financial counsel, to decide whether to execute the payoff if staff cannot secure the parity paperwork in time for the May bond sale. The payoff does not change the separate bond authorization vote later on the agenda.
What happens next: staff will proceed with the mayor’s authorization as needed before the Idaho bond bank sale in May, and will incorporate the payoff into the city’s financing plans for the sewer improvement project.
