Following the public hearing for comment on the issuance of new-money Water and Sewer Revenue Bonds, staff recommends that the Board:

1) Approve the attached resolution and related documents authorizing the issuance of up to $94,000,000 in 2019 Water and Sewer Revenue and Refunding Bonds for the purpose of:

     a) financing certain capital projects included in the Adopted CIP; and

     b) refunding outstanding bonds to achieve interest rate savings.

2) Authorize a public hearing to be held following the sale of the bonds (date TBD) to receive comment on the budget adjustment that will be necessary to the FY 2020 Budget to reflect these bond proceeds, issuance costs, and payoff of any refunded bonds. 

The County's plans call for a program of capital improvements to and expansions of the County's water and sewer system, including without limitation telemetry and SCADA improvements; water metering upgrades; Thornburg distribution and wastewater treatment; various pump station improvements; relocations and decommissionings; and expansion and improvements to the Massaponax wastewater treatment plant.  The issuance of the Revenue Bonds has been determined to be the preferable manner by which to finance such improvements. 

Additionally, the County's financial advisors have advised that the present interest rate environment and market conditions may present the County with an opportunity to realize a reduction in aggregate debt service payments through the refunding of some or all series of outstanding water and sewer bonds.  The attached resolution presented for the Board's approval includes language giving staff latitude to refund any series of Water and Sewer bonds previously issued by the County that may be to the County's advantage to refund this year.  As we have done in the past, Finance staff will continue working with our financial advisors to determine which outstanding bonds are ripe for refunding given market conditions as we approach the time of the bond sale.  We refund for the purpose of gaining interest savings.  We do not refinance which extends the length of payback term on the bonds.

Debt service related to the new-money issuance to fund upcoming CIP projects is included in the FY 2020 Adopted Budget.  A future budget adjustment will be necessary to record the bonds proceeds and issuance costs once the transaction is finalized.  Due to the amount of the future budget adjustment, a future public hearing will be required.

Staff requests that the Board approve the attached resolution and related document for the issuance of Water and Sewer bonds this fall.  As is always the case when we request Board approval of bond documents, the documents are subject to further edits as we finalize the bond transaction, but are substantially complete at this time.  Additionally, staff requests that a public hearing to budget bond proceeds be authorized to follow the closing of the bond sale, the time of which is to be determined.

FY 2020 debt service costs related to the new-money portion of this issuance are included in the FY 2020 Adopted Budget.  No savings have been assumed for the refundings as part of the budget.  An estimate of the savings cannot be provided at this time, as the market at the time of the bond issuance will determine which series of bonds are advantageous to be refunded.

Once the bond issuance is complete, we will request the Board's approval to adjust the FY 2020 Budget for actual bond proceeds and related issuance expenses.  We will also request an adjustment to the debt service budget as necessary and appropriate at that time.

Mary Sorrell, Director of Finance

Bonnie Jewell, Deputy Director of Finance for Budget