Summit County council authorizes Mountain Regional Water to issue up to $18 million in revenue bonds

The Summit County Council, sitting as the governing board of Mountain Regional Water Special Service District, voted unanimously Wednesday to authorize the issuance and sale of up to $18,000,000 in water-revenue bonds to finance a new Mountain Regional campus.

Mountain Regional representatives told the council the project budget is about $18.3 million, which includes roughly $2.3 million in contingencies and about $2.8 million of the districts own reserves already allocated toward the work. "We are here tonight to ask for authorization to issue and sell no more than $18,000,000 in aggregate water-revenue bonds," the districts representative said, describing plans for an administration building and a consolidated maintenance shop.

Officials said the district plans a direct private placement with a local bank rather than a broad public bond sale. Brian Baker of Zion Public Finance described the structure as intentionally flexible: "The idea would be to make it as flexible as possible," Baker said, pointing to callable features that would allow the district to refinance if market rates fall.

District financial staff said Mountain Regional holds an AA credit rating with a positive outlook and is budgeting for borrowing costs in the mid-single digits. Council questions focused on the debt-service impact on customer rates and construction cost uncertainty. Mountain Regionals finance representative said the issuance would be funded from water rates and impact fees rather than tax revenues and estimated the immediate interest-only burden at roughly $900,000 annually at a 5 percent coupon; staff said the district expects the average residential water bill to rise by about $8 per month as part of an overall package that could include an 8 percent rate action in the near term, with roughly 5 to 6 percentage points of that increase attributable to the new debt.

Councilmember Melina moved the resolution; Councilmember Tanya seconded. The council recorded a unanimous voice vote and the motion carried.

The district said it hopes to break ground in spring and expects a 162018-month construction schedule; the presenters indicated they are refining guaranteed-maximum pricing with a construction manager and performing geotechnical work. Mountain Regional also told the council it plans to market an existing building (recently appraised at about $8.3 million) to help offset costs.

The council adopted the resolution (MRW 2023-18) authorizing issuance of the bonds and related documents. No member recorded a dissenting vote.