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Batesville council adopts ordinance authorizing up to $110 million in sales-tax bonds for water treatment plant
Summary
The Batesville City Council adopted an ordinance authorizing issuance of up to $110 million in bonds secured by a 1% sales-and-use tax to finance construction and improvements to the city's water treatment plant; council voted to adopt the ordinance after three readings and bond counsel outlined repayment terms and closing expectations.
The Batesville City Council on Tuesday unanimously adopted an ordinance authorizing issuance of up to $110 million in sales-and-use tax bonds to finance construction, extensions and improvements to the city's water treatment plant. Mayor Rick gball announced the adoption after the council completed three readings by title and cast voice votes.
Bond counsel Ryan Bowman told council members the proposed bonds would be secured by a voter-approved 1% sales-and-use tax and that collections of that tax may be used only to pay debt service on the bond issue. Bowman said the city is proposing to issue the full $110 million and that the stated bond structure calls for interest-only payments during construction, with principal-and-interest payments to commence after April 1, 2028, and a stated final maturity of April 1, 2048.
Bowman also described the stated rate structure: a 0.75% stated interest rate plus a 1% servicing fee paid to the state agency that administers the loans, producing an overall stated lending cost of roughly 1.75%. He told the council the city may prepay the bonds when surplus collections exceed monthly debt-service needs and cited a 2009 sewer bond as a precedent in which surplus collections enabled early payoff.
Council voted to suspend the rules for second and third readings and then adopted the ordinance; mayoral staff said the city will sign and return the closing documents and expects to close the bonds in October, at which point funds would be available to begin the water-treatment project.
The ordinance text reads, in part, that proceeds will finance "extensions, betterments and improvements of the water facility of the City of Batesville, Arkansas," and will provide for payment of principal and interest and prescribe related matters. According to bond counsel, Arkansas Natural Resources (the administering agency) will approve pay applications and disburse funds incrementally as work is performed rather than providing a single lump-sum draw.
The council did not provide an individual roll-call tally in the transcript; the mayor announced that motions and readings carried by voice vote. Next steps described to the council include compiling a guaranteed maximum price (GMP) after contractor bids are opened, submission of the GMP to Arkansas Natural Resources for approval, and closing the loan in October so construction can begin.
The ordinance adoption completes council-level approval for the financing; the city manager and bond counsel said staff will present the GMP and related contract documents for council consideration once bids are compiled.
