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Bonding could accelerate water projects while preserving operating cash, consultant says
Summary
Zions Bank modeled a $7.8M water‑revenue bond at about 4.6% over 20 years producing roughly $618K annual debt service but improved reserve metrics and coverage ratios; councilors discussed tradeoffs including long‑term interest costs and project acceleration.
Jonathan Wirtz of Zions Bank walked councilors through a bond scenario that would accelerate a five‑year capital list while maintaining healthy reserve metrics.
"You'd have debt payments around $618,000 per year that you'd have to pay for the next 20 years," Wirtz said, adding that bond proceeds are restricted to capital use and would leave operating cash available for other needs. Under Wirtz's model, the water fund's days cash on hand increases and debt‑service coverage remains solid when the full $7.8 million is financed at an assumed 4.6% fixed rate over 20 years.
Councilors weighed benefits of completing long‑deferred projects sooner against the interest expense and multi‑decade repayment. Wirtz noted that stretching repayment over 20 years lowers annual payments compared with a 10‑year internal loan but increases total interest expense. Several council members asked whether the city could borrow a smaller amount and pair it with transfers or pay‑as‑you‑go projects; Wirtz and staff said they could model intermediate bond sizes and combined approaches.
