Public Utilities Board backs bond ordinances, approves $5.25 million DKJ concrete contract amendment

The City of Denton Public Utilities Board on June 23 unanimously recommended that City Council adopt two bond ordinances — up to $142,565,000 in general obligation refunding and improvement bonds and up to $254,050,000 in certificates of obligation — and approved a first amendment to the contract with DKJ Concrete Construction not to exceed $5,250,000.

The recommendations for the two ordinances were framed as steps that allow the city to proceed to a bond sale this summer. Randy Klingle, Treasury Manager, told the board the certificates of obligation (CO) notice of intent was published May 24 and May 31 in the Denton Record-Chronicle and on the city website, and that the board’s recommendation will go to council on July 15. Klingle said the city expects to take the bonds to market July 23 and to receive proceeds around Aug. 26.

Why it matters: the ordinances fund capital projects across utility funds — Klingle reported the water allocation at about $80,600,000, wastewater at about $77,100,000, the electric fund reduced to about $44,000,000 from earlier figures, and solid waste reported at roughly $11.1 million (a figure in the presentation was also given as $11,125,711). Klingle said the combined CO sale with general government and utilities will total $254,050,000 and that potential refunding of older bonds could yield about $1.3 million in savings.

Board action and votes: the board voted unanimously to recommend adoption of the ordinance authorizing issuance, sale and delivery of up to $142,565,000 in general obligation refunding and improvement bonds (motion by Susan Parker; second by Lee) and unanimously to recommend adoption of the ordinance authorizing issuance, sale and delivery of up to $254,050,000 in certificates of obligation (motion by Newquist; second by Rainer). The board also approved a first amendment to the contract with DKJ Concrete Construction for utility cut restoration services (motion and second recorded on the consent agenda; vote unanimous). The motions passed with an oral unanimous “aye”; a numerical roll call was not read into the record.

About the DKJ contract: Casey Bowles, Water and Wastewater Field Operations Division Manager, described the service as a contracted crew that "restore[s] the asphalt, concrete, and sod, or landscaping when we dig up a water line or a wastewater line for repair." The item was presented as a first amendment to the existing contract, increasing the not-to-exceed amount to $5,250,000 to cover restorations following both planned excavations and emergency repairs such as main breaks or sewer collapses.

Budget and refunding details: Klingle said the city reviews the possibility of refunding annually to find savings in callable issues; he reported refunded bonds at about 4.4% and projected market rates for replacement at about 3.55%. He described those projections as modestly better than rates in the last couple of years. The presentation included project lists by fund; staff noted the electric fund removed a land-and-building construction project from the bond list, reducing its bond-funded amount.

Next steps: the board’s recommendations move to City Council for final action; the treasury manager said staff will present the ordinances to council on July 15 ahead of the anticipated July 23 sale.

Ending: Board members asked for follow-up details on interest-rate history and project-level changes; staff offered to provide that information to the board before council action.