Refinancing of bonds for water project recommended
May 21, 2018
The Utility Finance Oversight Committee voted to recommend the city issue new bonds for a project to complete the water transmission line from Minden to the Quill Water Treatment Plant using savings from the refinancing of existing bonds.
The refinancing would save an estimate $3.3 million, but can only be done if the savings is reinvested in another water project.
The Minden to Carson City transmission line now reaches to the center of town, but must deliver water to Quill in order for the city to fully utilize water from Douglas County.
"It's like we have half a system, it's halfway to being used," said Darren Schulz, director, Public Works.
The project has been proposed since 2009, but has been repeatedly bumped further out due to cost.
The existing bonds were issued in 2010 at an effective interest rate of 4.33 percent to finance the acquisition of water rights in Minden.
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In 2016, Carson City asked the state if the bonds could be refinanced at a lower rate through the state's revolving fund, which is partially funded by the federal government. At the time, the Environmental Protection Agency said the bonds didn't qualify for refinancing because they were used to purchase water rights. Then earlier this year, the EPA granted a waiver as long as Carson City used the savings from the refinancing to invest in a water infrastructure project.
The approximately $10 million in existing bonds would be refinanced at about 2.43 percent interest for an overall savings of roughly $3.3 million, which the city would use to help finance another $7 million in bonds at 4.3 percent interest to build the transmission line.
If the refinancing recommendation is approved — by the State Board for Financing Water Projects and the Board of Supervisors — the new bonds would be issued in and construction on the transmission line would start in 2019.