Major Financing Decision for Capital Projects: The Board approved moving forward with a comprehensive financing strategy (Option 1B) using a 2026 four-year short-term note. This includes funding six high-priority projects: Tanner Clearwell, Tank D replacement, Tanner Reliability, Ione Reliability, Ione backwash, and Tanner backwash systems. The financing structure involves taking out the existing 2024 notes ($20 million) and securing $31.3 million in new money, with a final takeout financing required in 2030. This decision directly impacts the agency's ability to maintain reliable water service and fire protection capacity for customers in the upper country area, where staff estimated roughly 178 services on one side of the system and 78 on the other.
2016 Bond Refunding Strategy: The Board approved refunding the 2016 bonds (currently at $19-20 million outstanding) as part of the overall financing package. This strategic move aims to optimize the agency's debt structure by moving these bonds to a new subordinate lien, potentially improving the credit rating from A3 to A2 and reducing the legal minimum debt service coverage requirement on the new subordinate lien from 1.25 to 1.1, while the agency's financial plan still targets much higher actual coverage. While current market conditions show minimal savings at the A3 rating level (negative $45,000), achieving an A2 rating could generate $175,000 in savings, and purchasing bond insurance could yield approximately $262,000 in positive cash flow savings.
Already have an account? Sign In
