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Eureka approves public hearings on $2026 water and wastewater bond package to refinance debt and fund treatment upgrades
Summary
Council moved to proceed with hearings on Series 2026 water and wastewater revenue bonds that would refinance older debt, eliminate balloon payments and issue new debt to fund a wastewater 'eliminate bypass' project (city share up to $13.6M); staff estimated modest net savings but some public commenters urged more grant-seeking before borrowing.
The Eureka City Council on June 16 authorized staff to proceed with public hearings on a Series 2026 bond package that would refinance existing water and wastewater revenue debt and issue new wastewater revenue bonds to fund a major treatment-plant improvement.
Finance Director Malar told the council the water-refunding piece would be about $9.2 million (par amount) and would remove a scheduled $7 million balloon payment due Oct. 1, 2032; estimated present-value savings were presented as roughly $142,000. The wastewater portion would refinance prior wastewater debt (eliminating a $3.5 million 2037 balloon) and include new-money debt to fund the "eliminate bypass" project. The city expects to spend up to $13.6 million on that project; the new-money component was estimated at about $13 million with an assumed interest-rate scenario near 4.2% and a total payment just under $20 million through a 2047 payoff. Malar said packaging the water and wastewater components together and issuing multiple components at once improves investor interest and yields more competitive rates for small issuers.
During public comment a resident urged the council to pursue grant funding and other alternatives before issuing new debt and questioned whether the water-refinancing "savings" met typical thresholds for refunding transactions. Malar and staff responded that the combined transaction provides efficiency and avoids a near-term liquidity event, and that the city would not proceed if underwriter market interest made the issuance unfavorable.
Council discussion: Members asked about market and rate risks; Malar said staff could pull the issue if market conditions were unfavorable. Council also heard that the wastewater upgrades will route wet-weather flows to full secondary treatment rather than bypassing partially treated flows, improving Humboldt Bay water quality.
Action taken: Council moved to hold the public hearing and proceed with the package; the motion passed 5'0''00. The council did not adopt final bond documents at the meeting but authorized the hearing and next steps toward issuance.
Representative excerpt: "By issuing this new bond, we hope to achieve some savings...and we will avoid that liquidity event where the water fund would have to shell out $7 million," Finance Director Malar said.
