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Council approves private placement and schedules WIFA loan to finance Northwest recharge project
Summary
The Town Council approved Resolution R25‑ten on March 19 to authorize a private placement financing of roughly $6 million as part of a larger water project financing package; a separate WIFA loan for the remainder was scheduled for April.
The Town Council approved Resolution R25‑ten on March 19 to authorize a private placement water‑revenue obligation to help finance a portion of the town’s Northwest Recharge/Recovery development system. The financing package is structured as two components: a private placement for the partner portion and a WIFA (Water Infrastructure Financing Authority) loan for the town’s standalone portion; the WIFA transaction was scheduled to return to council in April.
Transaction details summarized to council: Chief Financial Officer Dave Gephart and financial advisor Mark Reeder (Stifel) described the overall project financing need at about $18 million. The private placement component before council was roughly $6,084,000 with bids received from financial institutions; the accepted bid yielded an interest cost in the low‑4% range (staff cited an illustrative bid of about 4.08%). The private placement was presented on a 10‑year amortization with estimated annual debt service of about $760,000. The WIFA loan for approximately $12 million and associated terms was to be presented to council in April. Reeder said the private placement includes a prepayment feature that phases down and allows the town to accelerate payoff if desired without excessive penalty after an initial period.
Why it matters: The Northwest Recharge/Recovery project expands the town’s water‑transmission and storage capacity. Council and staff said the town’s utility financials are strong—FY2024 revenues were cited at about $23 million—and that the combined debt plan preserves debt‑service coverage ratios in line with the town’s credit profile.
Key considerations discussed: Staff explained the split financing strategy was chosen to avoid “federalizing” certain partner portions of the project (which would trigger Davis‑Bacon prevailing‑wage rules and Buy‑America clauses and could increase construction cost) while still pursuing lower‑cost WIFA funding for the part of the project that is appropriate to federalized money. Council asked about early‑payoff provisions, rate impacts (staff said groundwater preservation fees and impact fees would contribute to debt service and the model does not require a rate increase), and amortization options; staff said 10 years was typical for a private placement in current market conditions and 15 years would be at the long edge for bank lenders.
Council action and vote: A motion to approve Resolution R25‑ten passed unanimously (7‑0). Council then acknowledged a scheduled WIFA loan presentation for April to finance the remaining portion of the Northwest project.
Ending: Staff and advisors said they would advance the private placement toward a closing target of April 22 and return with the WIFA loan documentation in April; they emphasized the town’s strong utility finances and the rationale for a split financing approach.
