Mauston Common Council Approves Issuance and Sale of Several Sewer and Water System Revenue Bonds
The Mauston Common Council approved the issuance and sale of several sewer and water system revenue bonds at its meeting on Tuesday night. Sean Lentz from Ehlers gave an update on the city’s utility project financing and tax incremental fund debt refinancing. At the last meeting, Lentz talked about the finance plan for the 2017-2018 projects, and earlier in the year, the city issued about $3.75 million to help finance building a new fire station, renovate the police station, finance a portion of street improvement projects for this year and the following year.
Lentz addressed the first resolution which was the authorizing the issuance and sale of $1.4 million sewer system revenue bonds. This issue is for the sewer utilities share of the 2017-2018 street projects. It is a bond for 20 years with a fixed rate of 3.3 percent, and is prepayable at anytime. Before, it was anticipated that those bonds would be $1.41 million, but the city was able to use $10,000 sewer cash to reduce the bond amount. Lentz said that the payments over that 20 year period would be about $95-$97,000 with interest. The sewer issue is backed by the rates and charges of the utility and based on the revenues of the sewer utility, the city could afford the existing debt as well as the new debt.
In the second resolution, which authorized the issuance and sale of $1.41 million water system revenue bonds, is similar to the first bond, according to Lentz. It is a bond for 20 years with a fixed rate of 3.3 percent, and is prepayable at anytime, and payments are anticipated to be about $95-$97,000. The only difference, according to Lentz, this issue is backed by the rates and charges of the water utility.
Lentz then talked about the third resolution. It was authorizing the issuance and sale of a $770,000 water system mortgage revenue bond anticipation note. There is more for the water utility for the 2017-2018 street improvement projects than the sewer utility and the water utility will have a stream of revenue coming in over the next five years from Tax Increment District #2. Lentz said what the Finance Committee and he decided to do was to delegate those payments from TID #2 to the water utility to help pay for some of the 2017-2018 street improvement projects. So they set up a debt issue of five year anticipation note to match those payments that will be coming from TID #2 back to the water utility and Lentz said, then the water utility use that revenue to make payments for the street improvement project. The rate was locked in at 1.5 interest and the note is also prepayable.
The last resolution was the authorizing the issuance and sale of a $2.685 million tax increment revenue bond (TID #3), pertains to the refinancing on a balloon payment on a note anticipation note the city issued in 2012 to pay for ongoing capital projects to complete the project plan for TID #3. Lentz said what has occurred is that the projects have been completed and the amount of that initial note has been drawn down. The city didn’t spend about $170,000 of the original note. Lentz said the balloon payment is coming due on December 1st and what they propose is to extend the balloon payment for a five year period and then use projected revenues from TID #3 to pay the new debt over the next five years. Payments are right around $560,000-$561,000 a year and the interest rate is 1.5 percent. After these expenses have been paid off, TID #3 will close. The city is also using about $400,000 in cash in TID #3 fund to pay that note off.
The resolutions were approved unanimously.
Source: WRJC.com
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