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Payson plans $5 million sewer bond as plant construction continues; city warns rates may rise
Summary
The city is continuing construction of a new sewer plant and plans to issue $5 million in bonds to complete the project; staff warned that maintaining required bond-coverage ratios may force future user-rate increases.
Finance Director Cathy Jensen told the council the Sewer Department remains in active construction of the new sewer plant and that roughly 64% of its operational revenue is currently applied to debt service. Jensen said the city plans to issue $5,000,000 in bonds to complete the plant and must maintain a 1.25 times bond-coverage requirement, which could require user-rate increases in coming years.
Jensen added the city will monitor coverage ratios and factor WIFIA or other funding options into future budget adjustments. Councilmembers heard that because debt-service consumes a large share of current sewer revenue, staff will return with rate scenarios if the coverage threshold cannot be met.
