HELENA — Gov. Steve Bullock said Friday he’s lowering interest rates and other charges for state loans that fund city wastewater and drinking-water projects in Montana, saving local governments $29 million over the next 20 years.
“That’s money that can be used for investment in other infrastructure projects or other challenges that communities have,” he said. “Or they can keep (the money) in ratepayers’ pockets.”
The lower charges will apply to 19 projects, ranging in size from a $26 million loan to Butte for its wastewater treatment plant to $440,000 for some water system work in Philipsburg. The projects are for fiscal year 2015, which begins in July.
Other large projects include a $17 million loan for Glendive’s wastewater treatment plant and $9 million in loans to Sidney for a pair of projects.
Bullock said reducing the cost of local infrastructure projects is a need identified as part of his Main Street Montana program, which surveyed local governments and businesspeople across the state on how to improve the economy.
The governor has the power to make changes in a state revolving loan fund that uses state and federal money to finance local water projects. The changes announced Friday include:
Reducing the long-term loan rate from 3 percent to 2.5 percent. Earlier this year, the Bullock administration announced an interim, three-year rate of 1.25 percent for the construction phase of a project.
Requiring only one payment held in reserve, instead of two.
Reducing the amount of required debt-service coverage that each community must collect.
John Tubbs, director of the state Department of Natural Resources and Conservation, said lower interest rates in the market are allowing the state to offer lower rates to the borrowing communities.
If interest rates spike in the market, the state may have to re-evaluate whether it can continue to offer the lower long-term rate, he said.
The revolving loan fund that finances the projects, established about 25 years ago, has grown to about $500 million.
Each year, the federal government appropriates money for the fund and the state must match 20 percent of it, through general-obligation bonds authorized by the Legislature.
“This is the flagship loan program for community water and wastewater projects,” Tubbs said. “This is how they get it done.
He also noted that the money usually goes to Montana engineering and construction firms, which are creating high-paying jobs with the projects.