A recent sewer bond refinancing will help Pelham officials improve services to the city’s residents while helping the city save money during a tough economic time, according to Pelham Mayor Don Murphy.

City officials recently opened bidding on Pelham’s portion of the State Revolving Sewer Fund, which is a debt of about $13 million.

The revolving sewer fund is a loan program operated by the Alabama Department of Environmental Management designed to finance public sewer infrastructure improvements throughout Alabama.

Because many cities are facing rough economic times, Murphy said he expected an interest rate of about 2.85 percent. However, Wells Fargo offered a lower-than-expected 2.576 percent interest rate.

Because the rate dropped from about 3.75 percent to 2.576 percent, the city will save about $650,000 over the next nine years, Murphy said.

“We will save about $128,000 in 2011 alone,” Murphy said. “And nothing else changed. It’s just that the interest rate will drop from 3.75 to 2.57.

“It’s a win-win situation for the city, because that savings will come at zero cost to the city,” he added.

With the city paying less on its debt service, Pelham will have more money to put into other services, like beautification and parks and recreation.

Because Pelham also recently signed a new garbage collection contract with Advanced Disposal, which is expected to save the city about $1 million over the next three years, Pelham will have an advantage over many cities also affected by the economic recession, Murphy said.

“If you’re not paying that extra money on interest payments, you have more money to put into other city services,” he said. “Our services to the people will be good no matter what, but it makes them even better when you have more money to put into them.”

Pelham was able to obtain the low interest rate because of its past financial management, and because it has a “good balance” in its reserve funds, according to Murphy.

“Standard and Poors was very impressed with the way we have managed the city’s funds,” he said. “You just have to be alert to things going on around you. If you can bid something out and get a lower interest rate, that’s what you should be looking at.

“That’s what happens when you get the private sector involved. The wheels start turning,” Murphy added. “That’s what you hired us for, and that’s what we’re doing.”