Hess Lake-Brooks Lake Sewer Project

How will we pay for the sewer system?

The sewer assessment of $19,481 is either paid in full when the property owner is assessed or it can be financed over a long-term period.

Typically the costs are financed over a 20-year period through bonds issued by the County; however, programs may be available allowing the project to be financed over a 40-year period.  This will not be known until the township boards form the sewer district and the sewer board and apply for the special 40-year financing through the USDA Rural Development Fund. 

There are several options for financing which would provide rates between 2.5% and 4.5% in the current market. The total annual payment for each of the 20-years will be fixed and would be determined based on the interest rate when the bonds are issued.  Click here to review the financing options.

If you do not pay the entire assessment up front -- or -- if you do not pay the assessment off early -- or -- if you do not pay extra each year (all of which you are allowed to do), then the type of financing can make a difference in how much interest you will pay.

There are three different sources of financing that the townships and County can choose:

• The State Revolving Fund

• Rural Development Agency

• Conventional Bond Financing

Each type has different interest rates, different terms, and different conditions.  The townships and County will seek the optimal financing for the project which has the lowest cost for property owners.

There are also two types of loan terms:

• A fixed payment loan -- This is like an auto loan where the payment is always the same, but as the loan is paid off, more principal is paid and less interest is paid.  The annual payment stays the same.

• A fixed principal/declining payment loan --  The payment starts at a higher amount and declines each year until the loan is paid off.  Annual payments are higher at the beginning of the loan term and decrease each year until the loan is paid off.

The less-costly loan in the long run is the fixed principal type with a declining payment (which is typical of the conventional type financing).

An example of payments under each financing scenario is provided below:

		Fixed Payment Loan			Fixed Principal/Declining Payment Loan
	State Fund   2.5% Rate   20 Year Term		Rural Dev. Fund   3.75% Rate   40 Year Term	Conventional   4.5% Rate   20 Year Term	State Fund   2.5%  Rate   20 Year Term	Rural Dev. Fund   3.75% Rate   40 Year Term	Conventional   4.5% Rate   20 Year Term
1st Year	$1,249.65		$947.93	$1,497.62	$1,461	$1,217	$1,850
5th Year	$1,249.65		$947.93	$1,497.62	$1,363	$1,144	$1,675
10th Year	$1,249.65		$947.93	$1,497.62	$1,241	$1,053	$1,456
15th Year	$1,249.65		$947.93	$1,497.62	$1,120	$961.87	$1,237
20th Year	$1,249.65		$947.93	$1,497.62	$    998	$870.56	$ 1,017
40th Year	N/A		$947.93	N/A	N/A	$487.03	N/A
Total Cost with  Interest	$24,993		$37,917	$29,952	$24,594	$34,457	$28,685

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Last modified: 06/30/08
 

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