Department of Finance
Reference: 2022 Water Activity Enterprise Bond Ordinance
To: Mayor Gregory Mills and Members of City Council
Through: Michael P. Martinez, City Manager
Prepared By: Catrina Asher, Director of Finance
Date Prepared: September 20, 2022
PURPOSE
To allow for the borrowing of funds to finance the City's Water Treatment Plant.
STRATEGIC FOCUS AREA
Supportive, Sustainable Infrastructure
Financially Responsible
BACKGROUND
In June 2022, City Council took action that initiated the construction of a new Water Treatment Plant. That action included approval of updates to water charges, the approval of awarding a construction contract for the project, and the approval of a reimbursement resolution allowing future bond proceeds to be utilized for construction costs incurred prior to the issuance of bonds. The groundbreaking for the new facility occurred on July 26, 2022.
The financial plan for this project, as has been previously presented and discussed, includes the issuance of bonds secured by the future revenues of the City's Water Activity Enterprise. The ordinance presented provides for parameters of those bonds, including the maximum amount to be borrowed, maximum interest rates, and the maximum final payment date. The ordinance also approves the form of certain documents that will be executed in connection with the financing.
The borrowing itself will occur through a competitive sale, which means that underwriters will bid on the City's debt offering and the City will award the bonds to the underwriter with the most competitive offer. This means that the exact interest rate and payment schedule will not be known until the bonds are sold. Therefore, the ordinance provides for maximums allowed rather than specific amounts and delegates to the City Manager and the Finance Director the authority to determine the final amounts, subject to the maximums.
The issuance of bonds is a legal process and is accomplished through a series of legal documen...
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