BVU, which operates OptiNet (the nation's first triple-play muni FTTH network), has transitioned from being owned by the City to being an independent authority. In its last fiscal year (2010-11), the public power utility finished with net income.
OptiNet finished ahead of projections.
Having split from the city, BVU is taking advantage of the Virginia Resource Authority to issue $44 million revenue bonds to refinance its debt.
“We’re going through the VRA pool which helps fund 88 cities and service authorities. Because of that – and because of the market – we’re potentially looking at very low interest rates of 3.3 percent,” Rose told the board during his presentation.
The debt currently has an interest rate approaching 5%. After refinancing, the utility expects to save some $500,000 to $750,000 a year - for a period of 20 years. The cost of refinancing is $900,000.
This story is worth noting for two reasons:
- Restructuring debt is not necessarily a sign of weakness -- BVU's OptiNet is quite successful.
- A reminder that small communities can benefit significantly by pooling bonding through programs like Virginia's VRA. States should help communities to work together in this way.