Memorandum
City of Lawrence
Finance Department
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TO: |
Mike Wildgen, City Manager
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FROM: |
Ed Mullins, Finance Director
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Date: |
July 19, 2005
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RE: |
Series 2005 Revenue Bond Issue
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On July 26, 2005 the City Commission will be requested to authorize the sale of $26,240,000 in water and sewer revenue bonds. The bonds are the first of a series of bonds to be issued every other year to finance the capital improvement plan of the Utilities Department.
Background
The City Commission has previously approved the Water and Sewer System Master Plan Report dated December 2003. Subsequent to the Master Plan approval, the City Commission received a Report on Revenue Requirements of the Water and Sewer Fund dated August 2004. The revenue requirements included a series of planned rate increases for the water and sewer services in order to meet current and future operating expenses and fund the projects approved in the Master Plan.
The Series 2005 Water and Sewage Revenue bonds include three components, 1) finance $17.2 million in capital projects (see list of projects below), 2) call the $4.2 million remaining from the Series 1996 revenue bond issue, and 3) advance refund the $4.8 million remaining from the Series 1997 revenue bond issue. The Series 1996 and 1997 bonds are being called or refunded for two reasons, to achieve present value savings and to eliminate the 145% coverage requirement in the bond covenants. The coverage requirement is the amount income exceeds debt service. Because of the favorable interest rate environment, the City should realize a present value savings on both bond issues in excess of $630,000. In addition, the covenants for the Series 2005 Revenue Bonds will only require a 120% coverage requirement.
The capital projects to be constructed with the bond proceeds are:
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Project Description |
Amount |
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Clinton Plant expansion |
$8,610,000 |
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Facility to dispose of water treatment residuals |
1,040,000 |
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Kaw Plant piping upgrade |
1,160,000 |
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North Lawrence pump station |
1,710,000 |
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23rd & Naismith sewer improvement |
240,000 |
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21st & Ousdahl sewer improvement |
560,000 |
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24th & Crossgate sewer improvement |
475,000 |
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Wakarusa & Harvard sewer improvement |
435,000 |
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Alvamar Drive sewer improvement |
960,000 |
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Clinton & Kasold sewer improvement |
770,000 |
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29th & Alabama relief sewer |
745,000 |
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Equipment storage building |
490,000 |
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Total |
17,195,000 |
Action Requested
The City Commission is requested to take the following action on July 26, 2005; 1) award the sale of the bonds to the best bidder, 2) adopt the bond ordinance, and 3) adopt the bond resolution. In order to expedite the sale of the bonds, it is requested that the ordinance be adopted on first and second reading at the meeting.