Perry approves up-to-$4.11M FAP loan, moves to start water-treatment upgrades and decommission aging mains

PERRY, Okla. — The Perry City Council and the Perry Municipal Authority approved measures Tuesday to pursue a pooled loan through the Oklahoma Water Resources Board (OWRB) Financial Assistance Program (FAP) to pay for three urgent water projects: rehabilitation and improvements at the municipal water treatment plant, a residuals-handling facility, and decommissioning old water mains.

Municipal finance adviser Chris Wolf of Municipal Finance Services told the council the water board will sell revenue bonds and lend proceeds to a pool of participating communities; the pool structure spreads issuance costs and speeds delivery of funds. “What we’re talking about tonight is a loan through the Oklahoma Water Resources Board Financial Assistance Program,” Wolf said.

Why it matters: City staff and consultants said the projects address Department of Environmental Quality (DEQ) compliance priorities and recurring water-system failures. The loan structure would deliver funds quickly — Wolf projected a mid‑December closing — allowing some construction and utility work to begin before the end of the year if the council finalized contract authorizations.

Key figures and pledges
- Project costs and loan size: Consultants estimated about $3.8 million to complete the three capital projects; with issuance and related costs the total funding request shown to council was just under $4,000,000. The authority resolution approved by the council set a not-to-exceed principal amount of $4,110,000.
- Term, interest and payment: The financing analysis used a 16‑year term (maturity roughly 2041–2042) and showed an average effective interest rate around 4.26 percent in current market assumptions; counsel’s resolution authorized an interest rate not to exceed 5.0 percent. Wolf projected level annual payments on the new loan around $340,000; city staff said planning had allowed for roughly $350,000 in annual debt service when setting utility rates earlier this year.
- Revenue pledge and coverage: The pledge for the loan combines pledged water revenues and a 2.25 percent sales tax that is currently composed of 1 percent permanent sales tax plus a 1.25 percent temporary sales tax that expires and reverts to 1 percent after the 1.25 percent portion sunsets. The program requires a minimum debt-service coverage ratio of 1.40 times on maximum annual debt payments; consultants projected coverage of about 2.43 times under conservative revenue assumptions.

Council actions and contracting
The council adopted a city resolution approving action taken by the Perry Municipal Authority and authorized loan documents to participate in the OWRB FAP pool (authority resolution with a not-to-exceed principal of $4,110,000 and rate cap). The Perry Municipal Authority separately approved a related trust and loan resolution and a reimbursement declaration to allow project expenditures before closing so the city can start work promptly.

The council also approved a professional services agreement with Cimarron Valley Engineering LLC for design and engineering of the water treatment plant improvements; staff said those engineering services will be funded as part of the project proceeds.

Project sequencing and procurement
City engineer and project managers told council the residuals-handling project and selected water-main decommissioning plans were sufficiently advanced to permit bidding and staged construction. Staff emphasized the benefit of bidding water-main kill-outs in unit-price, incremental packages to keep work moving and maintain flexibility; the water plant work will follow and is nearing a stage where bid documents can be issued.

Voices in the meeting
- Chris Wolf, municipal finance adviser: described the OWRB FAP pool structure, timing and projected terms and said pooled issuance speeds funding and reduces per‑borrower issuance costs.
- Russ (city finance/CFO): provided context on how the financing fits the budget and reminded council that earlier utility-rate adjustments were designed to support this level of debt service.
- Alan Brooks, bond counsel: described the authorizing resolutions and tax-law compliance steps including a not-to-exceed rate and principal amount to allow the December bond sale and closing.
- Matt (engineer, Cimarron Valley): described the readiness of water-main kill-out plans and residuals-handling design and said parts of the work can be bid in the near term.

Next steps and contingencies
If the OWRB sells bonds as scheduled, the council and PMA actions authorize the authority to accept its loan allocation and close in December. The new loan would be disbursed at closing in a single advance rather than as a drawdown construction loan; the city will begin construction and utility relocations per the engineer’s prioritized schedule. Staff noted the 1.25 percent portion of the sales tax that currently counts toward coverage will expire in later years; consultants accounted for that sunset and still projected coverage above the 1.4 requirement under conservative assumptions.

(Reporting based on the city meeting transcript; direct quotes are attributed only to speakers recorded in the meeting.)