Another costly day for Apple Valley (December 22, 2018)
December 19, 2018, was a bad day for ratepayers in Apple Valley who seek the Town’s seizure of our water system, as the Federal Reserve Board’s latest increase in interest rates again raised the cost of the hostile takeover by millions of dollars.
In June 2017, voters authorized the Town Council to borrow up to $150 million at up to 12% interest, despite the finance department having assured everyone in April 2015 (and again in April 2017) that a bond interest rate around 4.75% was likely. These latest Fed rate hikes have moved the Town’s likely interest rate to 7.0% or higher.
This is important because at 4.75% the monthly mortgage payment would have been $782,500 on a total cost over 30 years of $281,700,000. At 7.0%, the monthly payment balloons to $997,950 on a total cost of $359,263,340, with the interest cost of the mortgage alone consuming nearly $209,263,340.
This and other reasons are why the High Desert’s leading economic expert, Dr. John E. Husing, estimated that customers would be forced to pay the Town hundreds of dollars more every year to finance revenue bond debt and maintain the system than we are currently paying Liberty Utilities.
Neither the original hundred of millions for the purchase itself nor the additional hundreds of millions of dollars in interest will buy one more drop of water than we currently have, nor improve our current level of service, nor provide us with cleaner water, nor lower our water rates. So while the Town’s attorneys get richer, the rest of us grow poorer.
Apple Valley Citizens for Government Accountability