Council approves up to $150M wastewater refunding bonds; staff to apply $5.2M reserve to reduce principal

The Lake Havasu City Council voted 6–0 Tuesday to approve Resolution No. 25-3817, authorizing a refunding of the city’s senior-lien wastewater system revenue bonds (series 2025) in an amount not to exceed $150,000,000.

Council and staff framed the measure as a refinancing only: the transaction will not extend the debt’s final maturity, which remains 2045, and no new money is being added. Finance staff and municipal-bond advisor Mark Reeder of Stifel explained the refinancing aims to replace older bonds issued at roughly 4.80% interest with new bonds priced in the “high 3s to low 4s,” producing estimated annual debt-service savings of about $1.1 million and projected present-value savings in the millions.

Why it matters: Lowering annual debt service creates operating revenue the city can use for infrastructure needs. Staff recommended applying an existing rate-stabilization reserve — roughly $5.2 million accumulated for bond coverage — to reduce refunded principal and increase savings. Staff said the reserve had been released by the bond trustee requirement and is available for that purpose.

Council discussion focused on whether to apply the $5.2 million to buy down debt now or to use it for targeted infrastructure repairs. Councilmember Nancy Campbell pressed for details about tradeoffs and noted that using the reserve for infrastructure would reduce near-term debt savings; staff said the incremental annual cost if the reserve were used for infrastructure rather than for bond buy-down would be about $385,000 per year in the worst-case modeling shown.

Reeder described the bond-market mechanics for council: the city’s outstanding wastewater portfolio has been reduced from roughly $350 million to about $179 million, and the 2015 refunding included bonds that are now callable in 2025. If market conditions produce the council’s savings threshold, staff will proceed; if the market deteriorates, staff said they will not issue the refunding. Councilmember Diaz moved the resolution; Councilmember Moses seconded. The motion carried 6–0.

Ending: Staff will continue market monitoring and return final sale documents for execution; any final bonds will be issued only if the city’s savings threshold is met and the market conditions are favorable.