Rolla's Finance Director, Steffanie D. Rogers, introduced the proposal for an ordinance in order for the City to award a bid for sewer bond short term financing intended to finance a portion of engineering and design costs for the Vichy Road and Southeast Wastewater Treatment Plant improvements, and pay certain costs of issuance for the transaction.
The financing will bridge the one-to-two-year gap between project construction funding and the State Revolving Fund financing for the sewerage system revenue bonds. The city’s Finance Department, in conjunction with Piper Jaffray — to help the City prepare the request for proposal document — received three individual bids for the sewer bond short term financing for the Vichy Road and Southeast Wastewater Treatment Plant improvements.
“We are estimating that we will need a little less than $1.5 million to bridge the gap,” Rogers said at the Monday, May 6 Rolla City Council meeting. “We want to keep the project moving, we want to keep the professional services coming, the specs continuing, and the work, so it continues, so when the Missouri Department of Natural Resources project is completed and the state revolving fund financing takes place we will roll this money into that loan.”
The bonds will not be or constitute a general obligation of the City of Rolla, nor will they constitute an indebtedness of the City within the meaning of any constitutional, statutory or charter provision, limitation or restriction, and the taxing power of the City is not pledged to the payment of the bonds either as to principal or interest.
The bonds will constitute a portion of the bonds authorized by voters in the November 6, 2018 General Election, which was the local bond issue, Proposition S, for what was determined to be necessary sewer improvements, in order to ensure that the plants will meet the future state and federal environmental guidelines.
Missouri Department of Natural Resources financing requires a vote; conventional financing does not. Through voters taking to the polls and showing overwhelming support for Proposition S, the city was granted permission to participate in a low-interest 20-year loan through the Missouri Department of Natural Resources, as opposed to a traditional bank loan. And the passage of Proposition S authorized the City of Rolla to issue its sewerage system revenue bonds in the amount of $27.8 million.
Rodgers asked the city council for the first and final reading on the ordinance to award the sewer bond short term financing to Town & Country Bank at the rate of 2.13 percent since the gap financing bids expire on May 12, 2019.
The motion to suspend the rules and have the final reading for the proposed ordinance was passed by the city council, and Town & Country Bank was awarded the bid.
The project financed and plan of finance will include a portion of the design and engineering costs for the Vichy Road and Southeast Wastewater Treatment Plant improvements, and is part of the larger comprehensive plan that includes other upgrades and expansions of the wastewater system.
The City plans to refinance the bonds through the Missouri State Revolving Fund Loan Program prior to July 1, 2021, according to the Request for Proposal and Terms document in accordance with the ordinance passed.
The city of Rolla owns and operates its sewer system. The City’s Southeast Wastewater Treatment Plant and the Vichy Road Wastewater Treatment Plant were constructed during the 1940’s, while the Southwest Wastewater Treatment Plant located on Martin Springs Drive was built in the early ‘60s.
The Southwest plant was upgraded in 2006 through a voter approved bond issue, while the other two plants have managed to operate within the guidelines of the EPA. The City determined the technology at both plants had reached their operating lifetime and must be upgraded to stay in compliance with federal law and to improve the water quality in the receiving streams.