...Title
Amendment of the 2024 Water Utility capital budget to change funding sources for certain capital projects and authorization for $7.328 million Non-General Fund Government Obligation borrowing
...Body
The Finance Committee will draft a substitute resolution No. 84360 to amend the 2024 Water Utility capital budget to change funding sources for certain capital projects and authorization for $7.328 million Non-General Fund Government Obligation borrowing.
RECOMMENDATION
1) Amend 2024 Water Utility capital budget to change the funding source for certain capital projects from $7.328 million of Non-GF GO borrowing to Water Utility reserves.
2) Authorize $7.328 million of Non-General Fund Government Obligation (Non-GF GO) borrowing for Unit Well 19 Iron and Manganese Mitigation Project and cancel $7.328 million of revenue bond borrowing for said project.
BACKGROUND
Madison Water Utility (Utility) would like to change the funding sources for certain capital improvement projects included in its 2024 capital budget as detailed in Table-1 of the attached memo.
Total estimated project cost for Well 19 project is $9.2M. Projected will be funded by $7.328M of Non GF GO Bond and $1.872M of available Water Utility reserves.
The changes in the funding sources would result in 1) utilization of available Utility reserves instead of borrowing, thus reducing the total cost burden on rate payers and 2) avoidance of revenue bond issuance costs by taking advantage of the City’s planned 2024 General Obligation borrowing. The interest rate for Non-General Fund Government Obligation borrowing is anticipated to be around 4% and the repayment term for the borrowing will be 20 years.
The Utility had previously applied for a State Drinking Water Program loan for the Well 19 Project, which was denied by the WI Department of Natural Resources since the loan application did not make the priority points for the award of the loan.