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Council reviews options to fund $7.8M in water projects; experts warn cash-only would deplete reserves
Summary
At a South Ogden work session Jonathan Wirtz of Zions Bank told councilors a cash-only approach to about $7.8 million in water capital projects would drain reserves and could require a roughly 37% rate increase to reach a 180‑day cash target. He outlined alternatives including bonds and interfund transfers.
South Ogden councilors spent most of their July 15 work session weighing ways to fund roughly $7.8 million in water capital projects planned over five years.
"If we wanted to do $1,800,000 of capital projects in 2026, the current budget year, we'd run out of cash," said Jonathan Wirtz of Zions Bank, the consultant who presented the city's financial model and scenarios. Wirtz told the council the model shows starting reserves plus projected 2025 inflows would leave only about $86,000 in the water fund if the city paid for the projects entirely with cash.
The fiscal consequence of the cash‑only plan would be sharp: Wirtz said the model indicated a one‑time water‑rate increase on the order of 37% would be required to restore the city's minimum recommended reserve level of 180 days of cash on hand. He stressed rating‑agency metrics that influence borrowing costs — in particular debt‑service coverage and days cash on hand — and noted agencies prefer steady, modest rate increases rather than large occasional hikes.
As alternatives, Wirtz presented three broad approaches: (1) issue water‑revenue bonds to accelerate projects while preserving operating cash, (2) use an internal interfund transfer or grant (he modeled a $1.5 million infusion) to bolster reserves, and (3) combine a smaller bond with a transfer. In a debt scenario, issuing $7.8 million in water revenue bonds at an assumed 4.6% fixed rate over 20 years would create roughly $618,000 in annual debt service but leave the fund with solid coverage ratios and materially higher days cash on hand.
Council members repeatedly asked staff to reconcile a discrepancy in packet figures — some prior notes showed an $828,000 balance whereas Wirtz's model used an $86,000 residual — and requested historical spending data and the model's assumptions about embedded revenue growth. The council asked staff to return with refined scenarios (including removing assumed growth) and for Wirtz to share slides and the model with staff for follow‑up analysis.
The work session did not produce a decision on a funding path; councilors directed staff to produce additional detail before the budget adoption process.
