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Council approves preliminary steps to issue $251M in water revenue bonds; staff outlines affordability and coverage impacts
Summary
The council approved distribution of a preliminary official statement and related steps for a proposed $251 million senior water revenue bond (2025A) to refund commercial paper used for water capital projects. Staff reported debt‑service projections and coverage ratios and noted Moody’s and Fitch ratings with negative outlooks.
City finance staff presented and the council approved preliminary steps on July 22 to issue approximately $251 million in senior water revenue bonds (Public Facilities Financing Authority and City Council items). The financing would refund about $250 million of commercial paper used to pay water capital improvements over recent years and cover issuance costs.
Staff said interest rates used for planning were 4.49% (as of June 27, 2025) and estimated annual debt service would be about $5.2 million for the current fiscal year and average about $15 million per year through FY2056. The water utility’s aggregate debt‑service coverage ratio was shown to have been 1.52x in FY2024, with projected ratios ranging between 1.34x and 2.27x for 2025–2030.
The preliminary official statement (POS) described system service area, capital plans, risk factors, and recent rating actions (Moody’s AA2 with negative outlook; Fitch AA with negative outlook). City disclosure practices working‑group staff explained required certifications from the mayor, city attorney and chief financial officer and said the POS had been reviewed and would be updated before public release.
During public comment, residents asked about the long‑term affordability effects of borrowing and urged the council to scrutinize bond costs and potential impacts on water rates. Council members asked staff whether all material information was included in the POS; staff confirmed that disclosure was complete and accurate to their knowledge and recommended proceeding with distribution and pricing steps.
The council approved the POS distribution and related PFFA authorizations; staff plans to release the POS publicly, price the bonds in early August and close the transaction later in the month.
What’s next: staff will release the POS, proceed to market, and report pricing and closing results back to the council.
