SAXONBURG — The Saxonburg Area Authority is paying $2.3 million to save $1.3 million.

The authority board on Monday approved paying off the $2.3 million debt, which was the amount remaining from $5.9 million in a 2003 refinancing of 1979 bonds.

Paul Cornetti, authority manager, said in an interview the refinancing was done to get a better interest rate.

He said if the debt had not been paid off, the total paid over another 18 years would have been $3.6 million.

“It saves us the interest payments,” Cornetti said.

The authority annually paid $200,000 on that borrowing. Of the total payment, $130,000 was interest at a rate of 5.2 percent.

To wipe out the $2.3 million, the authority is taking $1.9 million from a PNC money market account and the remaining $400,000 from a debt service reserve fund.

“It depletes us pretty good,” Cornetti said.

However, that isn’t expected to affect sewage rates for the 3,350 customers in the borough and in Clinton, Penn, Jefferson and Middlesex townships.

“Right now, our projection is to not to have a rate hike next year,” Cornetti said.

Jay Rinebolt, authority board chairman, said in an interview that development will be the determining factor in whether future rate hikes are needed.

“We’re looking forward to more development to keep our costs down,” Rinebolt said.

Cornetti said the authority expects to serve 271 new buildings once several housing plans, including Weatherburn Heights and Blackberry Estates on Denny Road in Middlesex, are built.

Under current plans, 161 of those new units would come from Weatherburn. That number could increase.

“There could be more phases,” Cornetti said.

Eliminating the $2.3 million debt leaves the authority with another $48.4 million to repay.

Of that debt, there is $18.6 million left from $20.4 million originally borrowed in 2006 to finance the expansion of the sewage system to Penn and Middlesex.

The other $29.8 million is owed to the Pennsylvania Infrastructure and Investment Authority for a $34.5 million loan also used for the expansion project.

The total $48.4 million owed comes from a total of $60.9 originally borrowed.

“We’re putting a dent in it,” Cornetti said.

He said the authority is left with $1 million to cover any unforeseen issues and balance the budget with $200,000 being used each year to help offset the need for a rate hike.