Memorandum
City of Lawrence
Finance Department
|
TO: |
Dave Corliss, City Manager |
|
FROM: |
Bryan Kidney, Finance Director |
|
DATE: |
April 1, 2015 |
|
RE: |
Review bids received and approve sale of $90,680,000* water and sewage system improvement revenue bonds, series 2015 bonds to the lowest responsible bidder. Consider declaring an emergency and adopt on first and second reading, Ordinance No. 9102, authorizing and providing for the issuance of water and sewage bonds, series 2015. Consider adopting Resolution No.7111 prescribing the forms and details of and authorizing and directing the sale and delivery of water and sewage system improvement revenue bonds, series 2015. |
Background
The City of Lawrence currently has outstanding a $59,900,000 general obligation temporary note that matures May 1, 2015. The note was issued to finance a variety of water and wastewater projects. The projects funded by the note are either substantially complete or are anticipated to be completed within the next 18-24 months. The City needs to definitively fund the projects with long-term financing.
In addition to the projects currently financed with the temporary note, the Utilities Department has identified additional water and wastewater projects that need financing for 2015. We identified a portion of the 2015 projects that have defined costs and will be included in the 2015 permanent bond issue instead of issuing temporary financing. We should be able to lower issuance costs and lock into a lower interest rate due to higher investor in one large bond issue. We plan to consider financing for the remaining 2015 projects in the fall of 2015 as the project costs become more defined.
Projects
Projects included in the 2014 temporary note are:
|
Project Description |
Amount |
|
Kaw WTP Improvements - raw water intake |
4,779,809 |
|
Oread Storage Replacement and Booster Pump Station |
3,960,131 |
|
Kaw Transmission Main |
7,851,831 |
|
Water Tower Maintenance and Pump Station Improvements |
2,078,581 |
|
Watermain Assessment, Relocation, Rehabilitation, Replacement |
9,895,531 |
|
Kaw WTP Improvements |
1,537,925 |
|
Wakarusa WWTP - Influent Pump Station and Force Mains |
21,709,727 |
|
Inflow & Infiltration Reduction |
4,292,982 |
|
Sanitary Sewer Rehabilitation |
1,851,731 |
|
Pump Station 4 and Force Main Improvements |
1,142,922 |
|
Clinton Intake |
1,455,354 |
|
Clinton Taste & Odor Process |
1,549,748 |
|
Sanitary Sewer Relocations and Plant Imp. |
728,728 |
|
Less: Premium on Note sale |
-2,935,000 |
|
Total |
$59,900,000 |
These projects were all authorized before the temporary notes were issued.
Portion of new projects for 2015 to be financed with Revenue Bond:
|
Project Description |
Amount |
|
Wakarusa 2015 plant improvements |
$21,685,000 |
|
Watermain Assessment, Relocation, Rehabilitation, Replacement |
4,096,900 |
|
Sewer Rehabilitation, Assessment, CIPP, Manholes, Relocation, and Replacement |
949,900 |
|
Total |
$26,731,800 |
The Wakarusa project has been previously authorized by the City Commission. The new water and sewer rehab projects were approved by the City Commission on March 10.
In addition to funding the project costs, we estimate that there will be the additional financing costs and reoffering premium for a total estimated bond issue size of $90,680,000* calculated as follows:
|
Use of Funds |
Amount |
|
2014 temporary note projects |
$59,900,000 |
|
2015 projects |
26,731,800 |
|
Accrued interest on 2014 temporary note |
1,497,500 |
|
Debt Service Reserve Fund |
5,762,690* |
|
Cost of Issuance |
1,089,104* |
|
Less: estimated premium |
(4,301,094)* |
|
Total estimated bond size |
$90,680,000* |
The bonds will be 25 years with level annual debt service starting with an interest only payment in November 2015 and the first principal payment in 2016. The total cost of the projects and debt service for the bonds are under the amounts that were used in the latest rate model update.
Bond Sale
The City will conduct a competitive bond sale at 11:00 AM on Tuesday, April 7. Staff will bring to the Commission at the April 7 Commission meeting a completed bond ordinance and resolution to accept best bid and authorize issuance of the bonds.
The sale is not complete until an ordinance is adopted naming the purchaser of the bonds. An ordinance does not go into effect until a second reading. Staff is requesting the Commission declare an emergency and adopt the ordinance on first and second readings on the night of the sale.
Action Requested
The City Commission is requested to review bids received and approve the issuance and delivery of $90,680,000* water and sewage system improvement revenue bonds, series 2015 bonds to the best bidder. Consider declaring an emergency and adopt on first and second reading, Ordinance No. 9102, authorizing and providing for the issuance of water and sewage bonds, series 2015. Consider adopting Resolution No. 7111, prescribing the forms and details of and authorizing and directing the sale and delivery of water and sewage system improvement revenue bonds, series 2015.
*Amounts subject to change based on bids received on day of sale.