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Medford Water reports clean audit, $60 million debt for capital work and seeks FEMA grant
Summary
Medford Water officials told the council the utility received a clean audit and has taken on about $60 million in debt through WIFIA, an EPA loan and revenue bonds to fund resilience and capital projects; staff said managing liquidity risk is their top concern.
Representatives of Medford Water briefed the City Council on Jan. 15 about the utility’s recent audit, capital financing and debt plans.
Beau Bellic cough (identified in the meeting transcript as a Medford Water representative) told the council the utility received “a clean audit opinion. There were no findings or adjustments, no disagreements with our auditors.” He said the utility’s operating revenues were about $25,000,000, an 8% increase year over year, and that unrestricted net position had declined as the utility draws down funds to invest in resilience projects.
Bellic said Medford Water — historically a pay-as-you-go utility — had taken on roughly $60,000,000 in debt to fund capital spending. He described the borrowing as a mix of low-cost loans and bonds: two loans with the Environmental Protection Agency (one WIFIA loan at about 2% and another EPA loan at about 3%) and recently issued revenue bonds at about 4%. He said the utility also seeks a FEMA grant for roughly $34,000,000 to support resilience work.
Council members asked whether the water debt affects the city’s bonding capacity or ability to undertake other projects. Ryan Martin, the city’s chief financial officer, told the council that Medford Water’s debt does not directly reduce the city’s general obligation bonding capacity and that water and wastewater are generally treated differently in debt-capacity calculations. The council’s bond counsel had reviewed the bonding authorization documents used when the city authorized Medford Water to issue up to $150 million in bonds.
Bellic described the utility’s chief financial priority as managing liquidity and debt service after taking on substantial capital spending: “That is our biggest risk at the moment financially,” he said, referring to balancing capital investment with contingency funds and operating needs.
Councilors and staff discussed coordination during the bond process. Bellic said his team worked with the city and legal counsel during the bonding and loan approvals and that the utility stayed within the council-authorized $150 million limit. He told the council Medford Water plans to continue collaborating with the city on scheduling, legal review and debt forecasting.
Ending: Councilors thanked the utility for the update and asked staff to continue reporting on debt-service impacts, grant applications and project timelines as design and construction proceed.
