In the world of public finance, successfully completing even a single financing within a six to nine month period can often be a challenging and complex task that requires a significant investment of staff time for a locality. Needless to say, the Town of Front Royal was very busy in calendar year 2014, having completed three financings through VRA within the short span of approximately seven months, highlighting the Town's dedication to their infrastructure needs and the versatility and efficiency of VRA's financing programs.
In December 2014, Front Royal closed a Clean Water Revolving Loan Fund loan totaling more than $39 million to fund an upgrade of its sewage plant. The Town will benefit greatly from this 0% loan over the next 20 years, which will update Front Royal's wastewater treatment plant to meet tighter environmental regulations that limit the amount of nutrients that flow into the Chesapeake Bay. Front Royal worked in partnership with the Virginia Department of Environmental Quality, which provided a grant of nearly $11.9 million from the Water Quality Improvement Fund in addition to the loan that will cover the bulk of the project cost.
Just under seven months prior, the Town closed on two loans in the Virginia Pooled Financing Program (VPFP) in May 2014. One loan closed for $2.8 million for 20 years at an all-in true interest cost of just over 3.3% to fund improvements to the Town's surface water treatment plant to meet the federal Long Term 2 Enhanced Surface Water Treatment Rule. The project also addresses high levels of disinfection by-products. Upon completion, the project will extend the service life of the facility and satisfy the future water needs of the community.
The second VPFP loan refunded an existing VRA loan and resulted in net present value savings of $451,137. This level of savings represented 7.2% of the refunded par amount and more than doubled the industry standard minimum savings threshold of 3% of refunded par amount. The $6.1 million, 12 year loan refinanced a prior loan issued in 2006 that originally financed an expansion to the Town's water treatment plant that doubled treatment capacity from three million gallons per day (mgd) to six mgd. The expansion included improvements to the chemical storage and feed systems, modernized control systems, and installed new settling basins. In addition to the capacity improvements, the project provided better contaminant removal for the Town's water supply.
Amid busy day-to-day operations, Front Royal's dedicated staff successfully worked to finance two essential water and wastewater infrastructure projects and to refund another essential loan for cost savings. The Virginia Department of Environmental Quality and Virginia Resources Authority were pleased to partner with the Town to bring all of these projects to fruition.