San Antonio, Texas – The North American Development Bank (NADB) and the Agua Special Utility District (Agua SUD) signed a US$1.79 million loan agreement for the refinancing of existing debt that will help the utility reduce debt service obligations and increase available cash flows for the maintenance and operation of existing infrastructure. This operation will also lessen the need to raise rates and help the utility to continue providing water and wastewater services for the benefit of its customers in communities of Hidalgo and Starr Counties in Texas.
The refinancing provided by NADB through its COVID-19 Recovery Program (ProRec) will reduce annual debt service obligations by roughly US$17,000 over 21 years, representing 3.2% of system repair and replacement expenses or 1.6% of the cost of water production and treatment in 2020.
“The steps taken by Agua SUD will have a positive impact on the finances of the utility and thus on the well-being of the residents it serves, which is one of the main objectives of ProRec,” stated NADB Managing Director Calixto Mateos-Hanel. “Funding for this project was approved through an umbrella program under ProRec that expedites the refinancing of existing debt for public entities affected by COVID-19.”
“Throughout its more than 25-year history, NADB has enhanced the quality of life for people living along the U.S.-Mexico border by financing infrastructure projects for clean water, air and land,” said Congressman Cuellar. “The COVID-19 pandemic has further exacerbated inequities along the border at a time when a healthy environment, and clean drinking water, is most needed. The loan for the Agua Special Utility District in Starr and Hidalgo Counties will ensure that these significant social, health or economic benefits continue for border residents in my district. I remain committed to expanding clean energy, promoting a healthy environment, and improving the quality of life on both sides of the border.”
In December 2020, Agua SUD refinanced US$13 million of its existing debt through the NADB ProRec umbrella refinancing program. The US$1.79 million refinanced through this project was not included in the original transaction because it was not callable at that time. The savings generated by both loans will average US$157,000 annually, which represents 29.8% of system repair and replacement costs or 14.6% of the cost of water production and treatment in 2020.
In response to the crisis caused by the COVID-19 pandemic, the NADB Board of Directors approved a two-year financing program in May 2020 to support projects that have both environmental benefits and direct positive impacts on the economy and well-being of residents in the U.S.-Mexico border region. To expedite the refinancing of existing debt for public entities affected by the pandemic, in November 2020, the NADB Board certified and approved funding for an umbrella program under ProRec that establishes the guidelines and procedures for the certification and financing of these types of operations, which in general have similar characteristics.