I have sewer force main project, costing about $1.5 million, that needs to be financed. I am told that this can be done using a variable-rate financing plan. This would be a 20 year COP using the tax-exempt variable rate, current 10 year average of 3.1%. The asset would be the sewer line and we would pledge the wastewater net revenue. The risk, of course is that it is a variable rate. However, I am told that we can purchase a rate cap, such as 6%. The costs involved would be the Cost of Issuance ($75K), Discount ($25K), plus annual costs for Letter of Credit (0.75% of remaining principal) and Remarketing (0.125% of remaining principal). Is anyone familiar with this type of financing? Have there been any problems? What are the pitfalls? It seems to me that this interest rate sounds to good to be true. I want to be sure that I have completely researched it before going ahead. Mary Solty City of Pismo Beach (805) 773-7010 [EMAIL PROTECTED]
