Grover Beach Council approves private $5 million placement to fund wastewater upgrades

Grover Beach’s City Council on Sept. 8 approved a private placement financing of up to $5,000,000 to pay for required wastewater infrastructure improvements, a move staff said will allow the city to proceed with planned construction within weeks.

The council voted unanimously to authorize execution of an installment purchase and conveyance agreement after presentations from municipal advisor Albert Pesche, placement agent Piper Sandler and bond counsel Cyrus Tarabi. Staff said the financing was structured as a direct (private) placement after competitive outreach to about 28 banks and six responsive bids.

Municipal advisor Albert Pesche described the private placement as “the most cost‑effective” approach for the city given the size and timing of the project. Piper Sandler reported that Webster Bank submitted the winning bid and agreed to lock a tax‑exempt interest rate of 4.425% through closing. City bond counsel said the obligation will be payable solely from wastewater enterprise revenues and not from the general fund.

Why it matters: staff estimated a par amount near $4,940,000, roughly $380,000 in annual debt service and total debt service of about $7.5 million over the life of the loan. Cost of issuance including bank counsel fees was estimated at about $138,000 (roughly 2.8% of par). The financing closes in late September and funds would be wired to the city account so construction can proceed shortly afterward.

Legal and fiscal terms: the documents include a covenant to set wastewater rates and charges each year at a level equal to 120% of debt service (the covenant applies to rate setting, not a mid‑year default mechanism). Bond counsel warned that if the tax‑exempt status of the obligation were compromised, the interest rate would move from the locked 4.425% to a taxable rate (6%) and additional default provisions could further raise costs. The team also highlighted an optional redemption feature allowing refunding opportunities under defined conditions.

Council action: Councilmember Weyrich moved to adopt the resolution authorizing the financing; the motion was seconded and carried on a roll call vote with Councilmembers McCrory Driscoll, Tuggle, Weyrich, Mayor Pro Tem Robert and Mayor Dee voting yes.

Next steps: staff will finalize and circulate the legal documents, complete closing procedures later this month and begin the contracted construction work once funds are available.