The Morgan City Council this week took action to save tax payers more than $800,000 in interest over the next fifteen years.
Several years ago the city took out a USDA loan to fund needed improvements in the city water system. The loan was at a 4.5 percent interest rate, which at the time was a good rate.
The city has been working on building up the amount in enterprise funds to pay for infrastructure improvements and reduce future borrowing. Because of this, the city has accumulated sufficient funds to pay off the loan to the USDA from its own electrical enterprise fund.
The council approved a loan from the city electrical enterprise fund at a rate of 1.5 percent to pay off the 4.5 percent loan from the USDA. The loan term was also reduced to a fifteen year length. The combination of these changes resulted in a savings to tax payers of more than $700,000. In addition, the interest that the city will be paying on the loan from the electrical fund will actually be going back to tax payers instead of the USDA since the city is loaning money to itself. This change means that in reality tax payers will be saving more than $800,000 in interest over the life of the loan.
The city has also been rebalancing utility rates. They voted to establish a storm drain enterprise fund and adjusted rates between electrical, sanitation, and the storm drain system. Overall the changes have resulted in the same costs to users of these systems, but have better balanced the rates to reflect the relative costs of the services provided and to provide funds for future improvements.