In June 2011, Council was presented three options to finance the Wastewater Treatment Plant upgrade including:

Revenue Bonds

Revenue Bonds can be referred to a vote and would require sizable cash reserves and debt coverage requirements.  This option would result in significantly higher sewer rate increases, more than the City was willing to pass on to the public.  High sewer rate increases would be necessary to grow our cash reserves and to meet debt coverage requirements.

General Obligation (GO) Bonds

GO Bonds must be referred to a vote, would severely delay construction and prohibit taking advantage of favorable interest rates.

Limited Tax General Obligation (LTGO) Bonds

Council authorized staff to move forward issuing $38 million in LTGO Bonds.  The bond sale was completed mid-November and a competitive process followed in which interested underwriters bid on purchasing the bonds.  The winning bid locked the City into a 3.45% rate over a 20-year period.

The low rate is excellent news for the City.  A previous sewer rate study assumed the average rate would be 5% on $40 million.  The average annual savings to the city is approximately $325,000 resulting in $6.5 million saved over the 20-year life of the bonds.