City Council Minutes 2003 01 21 - Laserfiche WebLink

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Louisville City Council Meeting January 21, 2003 Page 10 Finance Director Charlene Laus addressed several funding sources that may be available at different times to make water rights acquisition possible. She reported that Ordinance No. 1412, Series 2003, if authorized, would combine the Water and Wastewater Enterprise Funds, and all the projections assume the successful combination of the current Water Utility Fund and Sewer Utility Fund into one enterprise fund. Water rights could be purchased through appropriations from the Water Utility and Sewer Utility Fund now, as very little funds have been expended in those funds to date, however, supplemental appropriations would be required at the end of the year. Laus reviewed the options for issuing additional debt: 1. City issue revenue bonds in the combined Water and Sewer Utility Fund. 2. City participates in the various funding programs offered through the Colorado Water Resources and Power Development Authority. Laus reviewed the pros and cons of each option: · If the City issued revenue bonds on its own, it has an A1 rating, without insurance. With bond insurance, the City would likely qualify for an AAA rating and could obtain better interest rates. · If the City were to contract with the Authority to issue bonds, which has an AAA rating, there would be a slight difference in interest rates. · If the City issued debt on its own, the rate coverage required would likely be 1.25. If the City contracts with the Authority, their rate coverage is 1.10, which allows flexibility in setting rates to cover the debt payments. · If the City were to issue bonds on its own, the issuance costs range from 1.5 to 2 percent of the principle amount of issue. On a ten million dollar bond issue, the issuance cost would range from $150 - $200 thousands dollars. If the City went with the Authority, they would pick up all the issuance costs, with the exception of the legal opinions from general counsel and bond counsel, which typically range between $10 to $15 thousand dollars, a saving of $120 to $130 thousand dollar. · If the City issued bonds on its own, it would likely take 3-4 months before funding is received. If the City went with the Authority, interim short-term financing is allowed if the applicant is approved. The interim financing is paid back through the bond proceeds. Van Pelt asked Laus if there were any downsides of going with the Authority. Laus stated one downside is not being able to set call provisions. Another factor would be the ability to pay on a monthly basis. Sisk asked if the interest rate on both options would be the same. Laus stated the interest rate would likely be slightly different if the City were to issue the bonds on their own. The City has a less than perfect rating, while the Authority has a perfect rating. However with bond insurance, the City could come close to the Authority rate. 10