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Council reviews $2.55M bond for pump station; water ratepayers to carry costs, staff says
Summary
Council members discussed a proposed $2,550,000 bond for a pump station, whether a referendum is required and how costs will be recovered through water rates; staff said about 50% may be reimbursed by grant and that the financing is expected to be spread over 20 years.
Council members questioned why a $2,550,000 bond ordinance for a pump station was before the Common Council without a referendum. Councilman Vincent J. Lofredo asked for an explanation of the process for bypassing a referendum on a bond of that size.
A director (Carl Urlacher) and water and sewer director Joe Fazino explained the practice and legal threshold the city follows, noting a common $3,000,000 threshold for when different procedures apply. Urlacher and staff said favorable loan terms (noted as roughly 2% over 20 years) made the approach appropriate for this water project. Urlacher said some grant reimbursement is expected and asked Fazino to confirm; Fazino confirmed that about "50%" of the cost is expected to be reimbursed in the scenario discussed.
Fazino said the cost of the pump-station work will be folded into water-rate calculations and borne by customers connected to the system. He said spreading debt over 20 years can reduce annual impact and that existing bonds in the water account will be dropping off in coming years, which may offset the new debt service; he did not provide a per-customer estimate at the workshop and said more precise figures would be available during the budget process. The council asked staff to provide estimated rate impacts when the budget is developed.
