Hollister council members Monday took the first step toward possibly lowering sewer rates by agreeing to request bids on a new rate study.
Council members unanimously agreed to release a request for proposals to fiscal consultants. The chosen consultant would review current rates and development impact fees, an update of which could also help to generate additional revenue as Hollister continues in a growth spurt.
While it could lead to more revenue on the development impact side, it also could spur lower monthly fees charged to property owners throughout Hollister for sewer services.
The move on sewer fee reductions comes two months after Standard & Poor upgraded the credit rating on the city’s sewer bonds, which funded the $120 million wastewater plant built a decade ago, from a triple B-minus to an A-plus. It means the rating agency is giving the city better credit marks in its ability to pay off the initial $120 million in sewer bonds, largely because Hollister has been paying down its debt ahead of schedule.
The city recently refinanced and sold the remaining $68 million in bonds, with 21 years left for the repayment, on a municipal market. With the refinancing, annual payments for the city will drop from $6.7 million to $5 million, or by 25 percent. The city also paid off $25 million early with available cash, and altogether the new borrowing cost is 3.17 percent compared with average interest rates of 5 percent on prior bond issues.
