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Hayward council authorizes up to $135 million in wastewater revenue bonds to fund plant upgrades
Summary
Council voted unanimously to authorize the issuance of 2025 wastewater revenue bonds, part of a financing plan to pay for an estimated $498 million of improvements at the city's Water Resources Recovery Facility, staff and consultants said.
Hayward City Council on Feb. 25 authorized city staff to issue 2025 wastewater revenue bonds with a not-to-exceed par amount of $135,000,000 to help finance major upgrades at the city's Water Resources Recovery Facility.
City staff said the projects are necessary to meet newly adopted nutrient-reduction requirements and will be financed through a mix of WIFIA loan proceeds, the 2025 bonds, and a planned 2027 bond series. The council approved the bond authorization unanimously.
The council heard a presentation from Christian Sprunger, vice president of NHA Advisors, who described the 2025 bonds as funding roughly 26% of the total project costs. "Tonight's item is specific to the ... 2025 bonds. We're seeking authorization to issue the 2025 bonds to provide approximately 26% of the required project costs," Sprunger said during the presentation. Sprunger and the city's financing team said the bonds are planned as a 30-year, fixed-rate issue with a standard 10-year par call and an anticipated annual combined principal-and-interest debt service of about $9,100,000.
Dr. Murray, a city staff presenter who summarized the regulatory drivers, told the council why the plant upgrades are required. "The water board, the San Francisco Regional Water Board, has been for a while concerned about the amount of nutrients that remains in treated wastewater," Dr. Murray said, noting the board's watershed permit adopted in July 2024 and the city estimate that the required improvements could cost about $498,000,000.
Under the financing plan presented, the city expects to pair the 2025 revenue bonds with a U.S. EPA WIFIA loan that could finance up to 49% of eligible project costs and with a second bond issue currently planned for 2027. Sprunger said the resolution before council sets a not-to-exceed par amount of $135,000,000 and a not-to-exceed true interest cost of 5.25% to allow flexibility on the day of sale. He added the underwriting method will be a competitive sale, and that final interest rates will be fixed only on the morning the bonds are sold.
Council members questioned staff about the timing and alternatives. Sprunger described market comparables and current pricing expectations, saying recent comparables put likely pricing in the mid-4% range and explaining that the not-to-exceed TIC of 5.25% provides a margin for market movement between authorization and sale.
The council vote followed a roll call; the clerk recorded the motion as moved by Council member Sirimano and seconded by Council member Andrews. The resolution passed unanimously.
Next steps outlined by staff: marketing and targeting a bond sale in mid-March with closing in late March, and returning to the council in early April for WIFIA loan consideration if negotiations complete as expected.
