chapter  4
6 Pages

Types of Long-Term Debt

We are not going to spend a lot of time on either balloon payments or irregular payments. They are rarely used by water and wastewater (w/w) utilities.

Irregular payment bonds/loans occur sometimes when there are a mix of repayment sources-with different terms-for the debt. For example, a utility might issue a bond to pay for an expansion of its treatment plant and for, say, 200 new connections. In such case, the utility might charge the homeowners connection fees to homeowners, over a 5-year period. On the other hand, the plant expansion would be paid for by all ratepayers over a 30-year period. So, the bond payments would be substantially different in the first 5 years than that in years 6-30 of the bond term.