Sunnyvale approves up-to-$50M solid-waste bonds to fund Smart Station upgrades; receives AA+ rating
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Summary
Council and the Sunnyvale Financing Authority authorized issuance of solid-waste revenue bonds to finance equipment and improvements at the Smart Station. The project totals roughly $51.5 million, includes a $6 million state recycling grant, and will be financed with 20-year bonds; the financing received an AA+ rating.
The City Council and the Sunnyvale Financing Authority approved a bond issuance Tuesday to finance a major equipment replacement and upgrade project at the city's Smart Station recycling and processing facility. Council voted 5-0 to approve the city resolution authorizing up to $50 million in solid-waste revenue bonds; the Sunnyvale Financing Authority approved parallel documents in a separate vote.
"We asked for a double A plus rating from Standard and Poor's, and we received that rating last night," Finance Director Matt Paul told the council. The rating was one of several positives Paul cited while presenting the financing plan: the total project cost is approximately $51.5 million, of which the city already secured a $6 million state recycling grant. The city previously awarded the main construction contract to Bulk Handling Services in May.
Paul said the bonds are expected to be 20-year utility revenue bonds with level debt service. Staff modeled an anticipated interest environment of about 4 percent for planning purposes and estimated annual debt service of roughly $3.3 million. The project's debt service will be paid from the Solid Waste Fund's net revenues; the city's financial plan anticipates rate increases over the plan horizon to cover the new debt and other operating needs. Staff also noted Mountain View is negotiating a contribution—potentially $4 million—toward its share of the facility's debt service, and Cupertino has indicated it will begin delivering waste once the equipment replacement is complete.
Council reviewed financing team appointments and the preliminary official statement, which outlines the security, risk factors and credit profile for investors. Paul said the financing team had taken rating analysts on a site visit and held technical briefings for the rating agency.
Both the city and the financing authority approved the financing documents; council members emphasized the project's role in improving recycling and processing capacity while noting the need to monitor Solid Waste Fund rates over the 20-year financing term.