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Murray County agrees to issue up to $8.07 million in bonds to back Red Rock Rural Water project
Summary
The board adopted a resolution authorizing Murray County to issue up to $8,071,000 in general-obligation bonds to support a roughly $16 million water system project by Red Rock Rural Water; board members noted the county's contingent liability and that interest rates will be set later.
Ron Schrammel, an attorney for Red Rock Rural Water, asked the Murray County Board of Commissioners to adopt resolutions authorizing the county to issue up to $8,071,000 in general obligation bonds to help finance a roughly $16 million water project serving areas near Lake Chatek and Lake Sarah.
"The project is about $16,000,000 in cost and $8,000,000 of that is going to be paid by grants," Schrammel said, adding that Red Rock will cover bond payments and that the county's contingent share if Red Rock defaulted would be roughly 10.5 percent of the obligation. He said a judge has already authorized Murray County to issue the bonds and that all nine counties served by Red Rock must sign a joint-powers agreement guaranteeing the debt in the event of a default.
The board asked questions about the length and cost of the bonds and voted to adopt the presented resolution. Schrammel said the bonds would carry a maximum annual rate of 1.75 percent and that annual debt service is about $283,000, while cautioning that the precise interest rate will be set later in the market.
Why it matters: The county's adoption of the resolution is a financing step that enables construction to proceed; it also creates a contingent liability shared among the nine counties served by Red Rock if the utility failed to make payments.
Board action and next steps: The board voted to adopt the resolution as presented. The financing timetable calls for market-setting of the interest rate after the project is closer to issuance, and the joint-powers agreement requires signatures from all nine counties in the Red Rock system before the bonds are sold.
