Memorandum

City of Lawrence

Finance Department

TO:	Mike Wildgen, City Manager
FROM:	Ed Mullins, Finance Director
Date:	March 30, 2005
RE:	2005 Revenue Bond Issue

Included in the recently completed water and sewer rate study was a financing plan for the completion of projects in the water and sewer master plan.  The financing plan anticipates the issuance of revenue bonds every other year with 2005 being the first year.  The proposed list of water and sewer projects to be debt financed in 2005 totals $17.2 million.

Background

With the completion of the 2003 water and sewer master plans and the 2004 water and sewer rate study, the City of Lawrence was given a list of future capital projects and a preferred manner of financing them.  While developing the financing plan, consideration was given to maintaining the required revenue bond coverage and lessening the required increases in the water and sewer rates.  The Utilities Department has developed the following list of projects to be debt financed in 2005.

North Lawrence Pump Station Improvements                           $1,710,000

23^rd & Naismith Sanitary Sewer Improvements                             240,000

21^st & Ousdahl Sanitary Sewer Improvements                               560,000

24^th & Crossgate Sanitary Sewer Improvements                            475,000

Wakarusa & Harvard Sanitary Sewer Improvements                      440,000

Clinton Parkway & Kasold Sanitary Sewer Improvements                 770,000

Alvamar Drive Sanitary Sewer Improvements                               960,000

Lower Naismith Valley Relief Sewer                                              745,000

Storage Building at Wastewater Treatment Plant                           490,000

Clinton Plant Expansion                                                          8,610,000

Disposal Facility for Lime Residuals                                           1,040,000

Kaw Water Treatment Plant Transmission Facilities 1,160,000

                                                                                           17,200,000

In addition to the above projects, the Utilities Department anticipates cash financing a total of $9.0 million in water and sewer projects for a total 2005 capital improvement budget of $26.2 million.  The list of projects includes some that were delayed from the 2004 master plan.

Recommendation

It is recommended that the City Commission adopt the revenue bond issue in the amount of $21.0 million to debt finance $17.2 million in projects, pay costs of issuance, and provide funds to finance a bond reserve. 

The City Commission will be requested at a future date to authorize the refunding of the 1996 and 1997 revenue bond issues.  The refunding will allow the City to realize a present value savings and also reduce its bond coverage requirement.