CITY OKs BOND ISSUE FOR WATER SYSTEM

The City Council authorized the sale of $25.5 million in waterworks system revenue bonds Wednesday to fund improvements to the city's water system.

The bonds are to be issued through the State Revolving Fund Program, which provides a subsidized interest rate.

The city will save an estimated $3.4 million in interest payments over the 20-year life of the bonds through the fund, said John Richbourg, the city's finance director.

The bonds will be retired by Jan. 1, 2018, through revenue generated by a quarter-cent sales tax approved by city voters in 1996.

The bond authorization was the sole item on the agenda during a special council session Wednesday afternoon at City Hall. The measure passed unanimously, with one member absent.

City Manager Michael Miller said the measure had to be rushed through the passage process to keep from losing the state aid, hence the need for the special session.

The water system project includes expanding the capacity of Treatment Plant No. 1 on Cape Rock Drive and improving the distribution system. Treatment Plant No. 1 was built in 1930 and last expanded in 1985.

The project should increase the city's water treatment capacity from the current maximum of 7.3 million gallons per day to 10 million gallons per day by 2010.

The improvements are needed to meet future demands on the system.

Under application guidelines set by the state Department of Natural Resources' Environmental Improvement and Energy Resources Authority, the city normally would have been limited to $9 million assistance under the Revolving Fund Program.

However, the state waived the limitation because of the city's strong credit rating and the amount of planning already committed to the project compared to other cities seeking assistance under the program, Richbourg said.

"We have the project so far along, and we are a good risk, so the state waived the limit," Richbourg said.