EAGLE MOUNTAIN — Thanks to the city's rapidly growing population, Eagle Mountain city officials have been able to refinance more than $20 million bonds that were issued to build the infrastructure for gas and electric utilities.

Eagle Mountain's population has exploded since 2000, going from 2,157 to 8,190 last year, making bond issuers more comfortable with the number of users on Eagle Mountain utility systems and willing to give the city a lower, fixed interest rate of 4.98 percent. That's down from a variable rate that changed weekly and reached levels as high as 5.25 percent.

"We had to guess each year what interest rates would do in the coming year, which is difficult to do in today's markets, and budget for that," City Administrator Chris Hillman said.

The new rate offers the city more stability and predictability in budgeting, and officials say the new bond issuance will save the city millions over its 20-year term.

"All in all, this helps to secure the long-term financial stability of the gas and electric utilities in Eagle Mountain," Hillman said.

One of the key issues is a reduction in coverage requirements. Under the previous bond issuance agreement, the city was required to collect $1.25 for every dollar it owed in interest each year. Now, the city will only need to collect $1.15 for every outstanding dollar. That reduction alone will save the city about $3 million over the life of the bond, Hillman said, freeing up more money to pay down the principal.

The city also will be paying much less for bond insurance. Before, the city was paying $300,000 a year in bond insurance. Now, it will pay a one-time insurance premium of $700,000, resulting in another $5.3 million in savings over 20 years.

Hillman said the most important impact of the restructuring will be steady utility rates.

"The biggest change Eagle Mountain residents will see is no change at all, which is a good thing," he said. "What that means is we won't have to raise rates to cover our bond issues."

In restructuring, Hillman said, the city has done all it can to keep utility rates down. However, since the city buys electricity and gas on the open market, increases in the cost of those resources would result in increases in utility rates.

The city is under a firm contract for electricity rates for three more years, but potential hikes in gas prices could push gas rates higher. But the new bond structure should keep any increases to a minimum.

"This bond will help keep utility rates for our residents as low as we can make them," Hillman said.

The city had to pay more money up front for the newly structured bond, including $700,000 to the debt service reserve fund, an emergency fund used to make bond payments when all else fails.

"You don't ever want to touch that money," Hillman said.

That fund now has $1.9 million, and if it is left untouched, the money will be used to make the final bond payment.

The city also had to pay the $700,000 insurance premium in one lump sum. With the two added expenses, the outstanding amount on the bond is now about $21.4 million. Even though that is an crease from the $19.8 million the city owed prior to the restructuring, city officials are confident they can pay it down more quickly because of the long-term savings.

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