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Santaquin to seek short-term bonding to cover remainder of water-reclamation and sewer upgrade guaranteed maximum price
Summary
Staff told council the Vancon GMP for the water reclamation facility is roughly $10.8 million while the city has about $9.36 million in cash available; remaining payments for contractor, engineering and membranes will require bonding estimated at $2.5 million to $3 million, and staff will meet Zions Bank Public Finance to begin bond process.
City staff updated the Santaquin City Council on the guaranteed maximum price (GMP) and financing plan for the city’s water reclamation facility and sewer-system upgrades.
Staff said the prime construction GMP with Vancon is approximately $10.7–$10.8 million. The city currently has about $9.36 million in cash available for the project, leaving a shortfall of roughly $1.4 million against the GMP. Additional outstanding obligations include about $400,000 for construction engineering (JUB), roughly $65,000 for geotechnical work (RB&G engineers) and about $500,000 remaining on membrane purchases that were ordered earlier. Those amounts put the likely bond need in the $2.5 million to $3 million range, staff said.
The city manager stated the administration will meet with Zions Bank Public Finance to initiate the bonding process and estimated standard municipal-bond timelines of roughly 90 to 150 days. Staff said they are pursuing bonding to avoid issuing contracts the city cannot pay immediately and to lock in pricing. Staff also noted the opportunity to later refund/refinance bonds if rates fall.
Councilors asked about contingency, interest rates and how the bond would affect the city’s credit rating. Staff said contingency was reviewed and remained available, that interest rates were recently “in the high fours” but fluctuate, and that the city’s existing low debt burden contributes to a double-A-plus credit rating so a modest new bond would not be expected to jeopardize the rating. Staff said they would bring the remainder of the GMP and related contracts back to council after bonding steps are underway.
No contract was executed in the work session; staff intends to return with the completed GMP, the additional contract amendments for engineering and geotechnical work, and bond documents after meeting with the public-finance adviser.
