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Staff outlines plan to split water and wastewater bond documents for financing flexibility
Summary
City staff and advisors described a refunding that would replace combined bond documents with separate 2026 water and 2026 wastewater bond documents; presenters said terms would remain the same, a small legal fee is expected, and splitting provides future financing flexibility for each enterprise.
City finance advisers and staff described a proposed bond-parameter change to split existing combined water and wastewater bond documents into separate 2026 water and 2026 wastewater documents.
A city presenter explained that historically water and wastewater were combined in one bond document; the proposed refunding would pay off the original bonds and reissue the same amounts and payment schedules under separate covenants so each enterprise can be evaluated and financed independently. Presenters said the two current bondholders (the Department of Environmental Quality and the Board of Water Resources, as referenced in the presentation) have been consulted and that the state has indicated no objection to the split.
The advisers said the work primarily involves preparing new legal documents and that there would be no change to payment amounts or maturities, but that administrative costs such as legal fees would be incurred. The stated advantage is flexibility: if one enterprise needs bonding in the future, bondholders would examine only that enterprise’s revenues and covenants rather than a combined revenue stream.
Council discussion covered the potential effect of additional enterprise bonds on credit, the timing of any future bonds, and whether the bond split is tied to the wastewater master-plan projects. Presenters said the split is largely administrative and that some projects (growth-related) may require future bonding depending on timing and need; the board and bondholders view separate documents favorably when enterprises are otherwise financially mature.
No formal vote to approve the refunding documents was recorded at the meeting; staff said they would circulate a handout and follow up with a PDF of the memo explaining the process.
