Council approves $30M and $40M bond anticipation notes, selects Truist; approves utility rate increase to fund utility capital work
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Summary
Council approved two general obligation bond anticipation notes — $30 million (general fund) and $40 million (utility) — and selected Truist’s 3.49% fixed-rate proposal. Council also approved a 9.5% utility rate increase for FY26, estimated at about $7.50 per month for a typical residential customer, effective Jan. 1.
Petersburg City Council on Oct. 21 approved two general obligation bond anticipation notes to support near-term capital needs and utility infrastructure investments, and approved a utility rate increase to help repay utility-related financing.
Finance advisers and bond counsel presented the financing strategy developed with Davenport and bank proposals received from multiple lenders. Staff recommended Truist Bank’s offer, a fixed interest rate of 3.49% with flexible prepayment terms; council approved that recommendation. The $30 million note will fund general fund capital needs and is intended to be repaid from one-time casino-related payments as those funds are received, according to staff. The $40 million note is for utility infrastructure to be converted later to long-term bonds and is expected to be repaid from utility revenues.
Davenport and bond counsel described the RFP process and shown comparisons of bank loan proposals. Staff noted the city can invest proceeds in the Virginia state nonarbitrage program while funds are on hand, which presently yields returns near or above the borrowing cost.
After the financing presentation, council held a separate public hearing and then considered an ordinance to amend city code to increase water and wastewater rates. Jacobs, the city’s rate consultant, recommended a scenario that pairs long-term debt funding with lower near-term rate increases. Council adopted a plan that includes a 9.5% increase effective Jan. 1, FY26, which staff estimated would raise an average residential bill by about $7.50 per month. Council discussed meter replacement and billing issues raised by residents, and staff committed to pursue meter replacement and corrective steps as part of the utility capital program.
Council voted on both bond anticipation resolutions and on the rate change by roll call; each motion passed unanimously (aye votes recorded: Cuthbert; Jones; Westbrook; Smith Lee; Vice Mayor Hill).