16. Authorize Sale of Water Revenue Bonds - Water System ImprovementsI e (1ry 0i Kalispell
Incorporated 1892
Telephone (406) 758-7700
FAX (406) 758-7758
Post Office Box 1997
Kalispell, Montana
Zip 59903-1997
Date: March 22, 1996
TO: Al Thelen
City Manager
From: Amy Robertson
Finance Director IV
RE: Water Fund bond issue
During the last budget process we anticipated selling revenue bonds to fund the new
water well and several looping projects identified by Public Works. John Wilson's
estimated cost for construction and engineering amount to $865,000. In addition we
will need to maintain a reserve equivalent to the highest annual debt service payment.
This would be approximately $90,000 annually on a million dollar bond issue. There
would also be issue costs and printing. Past practice has been to fund the required
reserves through the bond issue. Cash on hand for operations is currently at $502,000
(equivalent to 8 months operating reserve). Our water billings for this year are slightly
under projections and will depend on the weather this spring. Our operating expenses
are right on target with the budget.
The Water Fund financial statements for FY95 indicate that we have more than
adequate cash flows for debt service funding. We would be required to provide 125%
coverage for the debt service, approximately $112,000. We have no debt in the Water
Fund. The net cash provided by operating activities last year was $404,146 per the
City's Statement of Cash Flows. This bond issue can easily be sold with no increase in
the City's water rates.
In my discussion with Kreg Jones of D. A. Davidson, I assumed that we would be
looking at a 20 year bond issue. He indicated that rates are at 5.5% currently and thouht
we would have no problem selling the bonds. After given the authority to proceed it
will take about 45 day for the sale and another 30 days to have the funds I hand. It is
not recommended to sell the bonds until the construction bids are received in order to
insure that the bonds are sized correctly. In order to have funds for construction this
summer we need to proceed soon.
Douglas Rauthe
Mayor
Bruce Williams
City Manager
City Council
Members:
Gary W. Nystul
Ward 1
Cliff Collins
Ward I
Norbert F. Donahue
Ward 11
Dale Haarr
Ward II
Jim Atkinson
Ward III
Lauren Granmo
Ward III
Pamela B. Kennedy
Ward IV
M. Duane Larson
Ward IV