Cleveland Water Says It Won't Need New Bond Debt For Years

CLEVELAND, OH — The Cleveland Water Department recently announced it would refund previously issued revenue bonds, using newly issued bonds. The department said it could see an overall savings of $25.9 million in future debt payments over the next 15 years. The department also said, as a result, customers will not see the department take on any new bond debt for "several years."

Cleveland Water's new bond issuance is made up of $113.585 million in water revenue bonds, which will refund revenue bonds from 2012 and 2007.

"What does all that mean? A bond refunding is essentially a refinancing. The new bonds will pay off the older bonds but will have a lower rate for repayment. The lower rate will result in lower future debt payments," the department wrote on its blog.

Why does that matter to a resident in, say, Cleveland Heights? If Cleveland Water saves money, it should be able to pass those savings on to customers, in some form. The department said it is funded mostly through usage rates. Possible increases in usage rates are evaluated based on the department's debt and its debt payments.

"Having lower, more predictable debt payments helps long-term budget planning," the department wrote. "It also means that we will be able to pay for scheduled infrastructure projects with cash-on-hand and will not need to take on any new bond debt for several years."

Cleveland Water also received a credit rating upgrade in connection with the refunding. The department is now at the second highest rating available. That rating should also lead to lower interest rates on future debt.

The city of Cleveland Heights recently transitioned to service from Cleveland Water. The last bill from Cleveland Heights came to residents in January 2017. The first Cleveland Water bill came February 2017. More information on the city's switch to Cleveland Water can be found by clicking here.

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