LAS VEGAS, N.M. (AP) – The state Water Trust Board has forgiven a $562,000 debt from the northern New Mexico city of Las Vegas.
The Las Vegas Optic reported that City Council members made the debt reduction official last week.
The Water Trust Board awarded the city $330,000 in funding in 2011 for an effluent project and another $1.5 million for a well replacement project.
When that funding was awarded, the board determined that 60 percent of it would be a grant, which wouldn’t have to be repaid, and the remaining 40 percent would be a loan.
But the board recently decided to change the funding it allocated for those two projects into a 90 percent grant and 10 percent loan, effectively forgiving $562,000 of the original debt.
A project manager in the city’s utilities department said the city had asked the Water Trust Board to consider reducing the city’s interest rate, and the board came back with the suggestion that the loan amount be reduced.
City Utilities Director Ken Garcia said the Water Trust Board’s decision frees up more than half a million dollars for the city’s other water infrastructure needs.
He said the Water Trust Board bases its grant-to-loan ratio on the borrower’s financial capacity. At the time the original funding agreements were approved, the city had just raised its water rates, and the board felt the city could afford to pay more.
More recently, when the Water Trust Board saw that the city was moving forward with a multi-million expansion of its Bradner Reservoir, Garcia said, it decided to give the city better terms on the earlier funding agreements.