The City of Borger has officially taken action to participate in the issuing of revenue bonds by the Canadian River Municipal Water Authority.
Action was taken by the Borger City Council earlier this month to authorize participation in the CRMWA’s Subordinate Lien Revenue Bonds, Series 2011, and approve an amendment to the City of Borger’s conjunctive use groundwater supply agreement with CRMWA.
Eddie Edwards, Borger City Manager, said that during a special-called council meeting on March 22, 2011, Kent Satterwhite, General Manager of CRMWA, personally advised the council that a tentative agreement for the purchase of MESA’s water rights was struck.
The resolution authorizes the city’s participation in the amount of construction costs. With favorable passage, the resolution maintains the City of Borger’s level of participation in the CRMWA at 5.549 percent since all member cities have now confirmed their participation in the acquisition of additional water rights.
During the council’s May 17 meeting, the council, in agreement with the city’s conjunctive use groundwater supply agreement (1996) with CRMWA, formally received the “Notice of Intention to Issue CRMWA Subordinate Lien Contract Revenue Bonds, Series 2011,” and also indicated the city’s preference on the level of participation, funding, and debt structure.
The CRMWA bonds will be issued in an amount not to exceed $93 million in proceeds and $1,275,000 in financing costs. The city’s share of the bonded debt will be $5,231,320.
According to Edwards, the one remaining variable is the interest rate, which will not be determined until the sale of the bonds has actually taken place, scheduled on or after July 15, 2011. Based on current estimates, the City of Borger’s 20-year debt service will be approximately $33,400 monthly starting this October.
He said it was the firm belief of the staff that revenue from water sales in one form or another should be used to fund the additional debt service. Edwards said with this in mind, there are a number of ways to provide a funding stream for the debt service, which include the following:
•Spreading evenly across all customers (base rate) would add approximately $6 per month to each customer’s water bill
•Volumetrically (in rates per 1,000 gallons), which would ratio the increase to each customer depending on consumption
•A combination of both base and rates, and/or increases in other revenue streams which would reduce the general fund’s dependence of revenue from water and sewer sales (currently budgeted at $750,000 annually)
Edwards said a 11-12 percent increase for water service should be expected in the proposed budget for 2011-12.
He said the purchase of water rights is an investment for the City of Borger’s future water resources, but its effect is unique in that it will receive no immediate benefit from the investment.
“This purchase is for water rights only and does not include any funding for additional infrastructure to actually pump said water,” he said.
Edwards said if Lake Meredith continues its decline, it is possible that another issue to fund the construction of what will likely be dubbed CRMWA2 could occur sooner rather than later. Fully participating at this time in effect pre-purchases roughly a 50 percent buy-in in CRMWA2 when it happens.
“Full development of CRMWA2 is expected to double the production capacity of 65,000 acre feet to 130,000 acre feet per year,” he said.
He also said staff plans to budget approximately $1.3 million to $1.7 million in next year’s proposed budget for additional water wells. Funding for preliminary engineering and exploratory test wells was approved in the current year’s budget.
Authorization was also requested to allow the balance of the water/sewer reserve fund to remain significantly higher than the council’s established goal of $3 million.
“This request was made in anticipation of funding additional water wells during the FY 2011-12 budget cycle without the need for additional debt,” Edwards said.