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Thornton staff seeks council OK to advance water revenue bonds, plans refunding of TDA bonds
Summary
Finance director presented proposals to prepare water revenue bonds tied to PFAS mitigation and to refinance TDA bonds issued in 2015; council voiced questions about long-term rate impacts and asked staff to proceed to bring ordinances and parameters to future meetings.
Thornton’s finance director briefed the City Council on April 1 about plans to seek authorization to prepare water revenue bonds tied to the Thornton Water Project and to refund tax increment (TDA) bonds issued in 2015.
Finance Director Kim Newhart described the water-related borrowing as primarily intended to fund PFAS mitigation and other Thornton Water Project needs. Newhart told the council staff’s current estimate for PFAS-related costs is about $250,000,000 and that would result in an annual commitment to the city of roughly $16,000,000 (as stated during the session). Newhart said staff plans to return to council on April 8 with a resolution of reimbursement — a procedural item that would not itself issue bonds but would allow the city to reimburse certain expenditures from bond proceeds when debt is later sold.
Newhart described the timing and approval process for municipal debt: staff works with municipal advisors, outside bond counsel, and rating agencies; council would be asked later (potentially in late 2026) to approve an ordinance of parameters that sets the execution limits for a bond sale. For the TDA Hundred And 40 Fourth bonds issued in 2015, Newhart said the city has reached the bonds’ call date and can refinance those bonds without extending the maturity, which can produce savings. Council touch points for the TDA refunding were identified for May 13 when staff will return with ordinance items.
Councilmembers asked how new borrowing would affect water rates. Newhart said the city models debt-coverage ratios and currently expects that modest, average annual increases (roughly 3% inflationary increases in modeling) would be sufficient to meet coverage requirements. She said the two recent 11% rate increases the council approved previously were intended to help meet coverage requirements related to the Thornton Water Project and that a similar second 11% increase could be requested later this summer depending on final PFAS cost estimates. Newhart emphasized the bonds discussed would be water-revenue bonds backed by the water enterprise and would not impact the general fund.
Council did not object to staff preparing the required documents and returning with formal reimbursement and parameters ordinances on the schedule provided.
Staff indicated additional budget amendments might be needed later to cover issuance costs depending on the final structure of the financing.
