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Council authorizes up to $240M in sewer revenue bonds to fund wastewater capital program, refund older debt
Summary
Council authorized issuance of up to $240 million in sewer revenue bonds and approved the Public Facilities Financing Authority financing structure to fund wastewater capital projects and refund prior bonds for debt-service savings; staff estimated a true interest cost near 4.6% and potential net present value savings from refunding.
The City Council authorized the issuance of up to $240 million in sewer revenue bonds on Nov. 18 to fund baseline wastewater capital projects (including elements of the Pure Water program) and to refund 2015 and 2016 sewer revenue bonds to capture debt‑service savings.
Finance staff presented the financing plan. "The proposed bond financing of up to $240,000,000 will fund this baseline program," Jyoti Pantlu said. Kevin Warner summarized financing assumptions and timing, saying estimated true interest cost was roughly 4.6% as of the Nov. presentation and that average annual debt service would be about $15 million over 30 years for the new-money portion. Warner said refunding the 2015/2016 bonds could yield roughly $36 million in debt-service savings (net present value) subject to market conditions at pricing.
Legal staff described the standard bond‑issuance documents (supplemental indentures, a supplement to the master installment purchase agreement, escrow agreements and a continuing disclosure commitment). Staff reported the bonds would be repaid from net system wastewater revenues under the authority structure and that covenants require rates sufficient to meet coverage ratios for the life of the bonds.
The council approved the ordinance authorizing the financing and also approved a related Public Facilities Financing Authority action (FA1) to support issuance; both votes were recorded 8–0 (one member absent). Staff said the city plans to return in early March 2026 with the preliminary official statement and a negotiated sale and anticipated a mid‑ to late‑March closing, subject to market conditions.
Speaker John Stump raised concerns that Pure Water costs are funded through sewer rates and urged attention to affordability; staff and council members noted the bonds align with the sewer utility’s approved four‑year rate case and that program funding is part of multi‑year CIP planning.
Next steps: staff will return to council in March with financing documents, the preliminary official statement and pricing recommendations for final authorization.
