The city of San Diego announced Thursday it has refinanced a loan with the U.S. Environmental Protection Agency that city leaders say will save $293 million for taxpayers as the public utilities department begins work on Pure Water San Diego — the largest infrastructure project in the city’s history.
Pure Water is a phased, multi-year program intended to provide one- third of San Diego’s water supply locally by the end of 2035. According to a city statement, it will use water purification technology to clean recycled water to produce safe, high-quality drinking water.
“The innovative Pure Water project is an investment in our future that will provide San Diego the reliable water supply we need for our economy to grow and our city to thrive,” said Mayor Kevin Faulconer. “By taking advantage of historically low interest rates, we’ve been able to knock nearly $300 million off the borrowing costs and provide that savings to our water customers.”
The Water Infrastructure Finance and Innovation Act loan from the EPA is providing funding for up to $614 million of the costs of the program’s Phase I projects. After refinancing, it now has a single fixed-interest rate of 1.29% and a 35-year repayment term from “substantial completion” of the project, which is projected in fiscal year 2025.
The loan was originally executed in November 2018 with an interest rate of 3.36%. The reduced interest rate results in approximately $293 million in savings over the life of the loan.
The WIFIA loan will provide approximately 74% of the water system’s share of the total Pure Water Program Phase 1 project costs. Around 97% of the project costs are expected to be funded with the WIFIA loan, State Revolving Fund loans and grant proceeds.
“Working on the Pure Water program is exciting because of the sustainable water supply it will offer San Diego in the future,” said Shauna Lorance, director of the city’s public utilities department. “The refinancing of this loan makes it a better value moving forward for ratepayers.”
Construction bids for the North City Pure Water Facility component of the Pure Water system are due this fall. According to a city statement, city leaders anticipate awarding bids in spring 2021.
— City News Service