Voters authorized debt in 2014
The Eagle River Water & Sanitation District issued $23.3 million of new bonds to fund required improvements to its wastewater treatment system. The bond issuance was authorized in May 2014, when district voters passed a ballot measure (70 percent in favor) approving the new general obligation debt, to be paid back by property tax within the district boundaries.
The mill levy associated with the new debt will begin in 2017, after an existing mill levy expires. According to finance director James Wilkins, the district is paying off a 1998 bond this year. “The mill levy assessed for the ‘98 bonds for the 2015 property taxes, which are paid in 2016 by real property owners within the district’s boundaries, was 0.621 mills,” said Wilkins. “With the new bonds’ annual payment, that mill would drop just a bit – based on last year’s valuations – to 0.619 mills, so it’s a slight tax decrease.” Similar to the mill levy expiring this year, the new one is tied to an annual debt service payment, so the mill levy may fluctuate up or down to generate the exact amount needed each year.
Prior to the 2014 election, the district indicated to the public that the new bond issue’s repayments would be timed with the payoff of the 1998 bond, such that the impact to property taxes would be nominal. “With the payment on the new bonds almost matching the ones paid off this year, the taxes paid to the district for general obligation bonds will be almost identical,” stated Wilkins.
The 2014 ballot language restricted spending of the bond proceeds to capital expenses related to the district wastewater master plan, which was developed to meet newly enacted statewide regulations that limit the discharge of nutrients from wastewater treatment facilities to waterways. That plan is being implemented in phases, with the first large project at the Edwards wastewater treatment facility scheduled for completion this fall.
The current low interest rate environment allowed the district to finance the improvements at an average interest rate of 3 percent. Additionally, due to the current market appetite for high quality municipal bonds, Wilkins said the district received a coupon discount of nearly $2 million, which covered the issuing costs and allowed the district to realize a full $25 million in proceeds.
Standard & Poor’s Ratings Services assigned its ‘AA-’ rating to the bonds, noting the district’s “favorable service area economy, extremely strong wealth and very strong income levels, and strong liquidity position” as well as “relatively stable utility operations, strong underlying economy, and favorable debt profile” in its ratings report.
The bond sale closed March 31; Wilkins noted its success was due in part to buyers wanting bonds from well-managed local governments. The proceeds will fund a substantial component of the next phase of the wastewater master plan, which is closely evaluated at each step, so the district meets the nutrient regulations goal of improved stream water quality in a fiscally responsible manner.
Contact: James Wilkins: 970-477-5442