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Waterville EDA and City set bond parameters to finance new fire station
Summary
At a joint May 12 meeting, the Waterville Economic Development Authority and City Council set bond parameters to finance a new fire station, removing an extraordinary call provision and setting a $5.6 million borrowing cap and a 5.25% maximum TIC; motions passed unanimously.
Waterville officials on May 12 authorized bond parameters intended to finance construction of a new fire station, setting a borrowing ceiling of $5.6 million and a maximum true interest cost (TIC) of 5.25%. The joint session of the Waterville Economic Development Authority (EDA) and City Council approved the parameters unanimously and authorized the EDA president and the city administrator to accept a bond within those limits.
D.A. Davidson broker Paul Donna presented the proposed financing structure, saying the plan contemplates a 20-year amortization with a repayment/refinance feature in year seven and an indenture trust to manage proceeds and a reserve account. Donna reported the Sources and Uses as follows: Project Fund (Fire Station) $5,000,000; Reserve Fund $425,725 (about one year of debt service); Financing Costs $168,184.88; total uses $5,593,909.88. Donna said an issuing par amount was estimated at $5,540,000 but could be adjusted by market conditions.
Officials discussed an “extraordinary call” provision, which would let the bond be called early if the building were destroyed, and the extra cost that provision would add (Donna estimated $125,000–$150,000 in additional interest). On a motion by Scott Potter, seconded by Richard Davis, the group removed the extraordinary call provision; the motion carried 5-0. The EDA later set the borrowing ceiling at $5.6 million (motion by William Conlin, seconded by Scott Potter) and capped the TIC at 5.25% (motion by William Conlin, seconded by Richard Davis); both motions carried 5-0.
Donna also explained the proposed ground lease under which the EDA would lease the fire hall land to the City, and he described an annual-appropriation clause that would allow the City to withhold lease payments if the council did not appropriate funds in a future budget. Donna said that appropriation risk could affect the City’s credit profile and that trustees and bondholders review whether an asset is essential before accepting appropriation risk.
The EDA approved Resolution 2025R-004 establishing bond parameters; the City also moved forward on Resolution 2025R-014 related to execution of a ground lease and continuing disclosure. The group reviewed the preliminary official statement; Donna said final market results were expected in June. The meeting adjourned at 5:15 p.m.
