WILMINGTON — The Cape Fear Public Utility Authority is planning to issue at least $43 million in bonds to fund the construction of major upgrades at the Sweeney Water Treatment Plant; depending on when the utility issues those bonds, the total amount could be as high as $45 million.
The plant upgrades, designed to filter out GenX and other PFAS, are projected to come online in 2022, with a 34-year operating lifespan. The lifetime cost of the project is projected to be around $215 million.
CFPUA has said the rate increase necessary to repay the bonds – plus the roughly $3 million annual operating cost of the plant upgrades – will be around $5 monthly for an average customer (obviously, larger households, as well as commercial and industrial customers, could pay more based on water usage). When that rate increase takes place depends in part on how the bond process proceeds.
During a presentation made to the Cape Fear Public Utility Authority (CFPUA) board this week, Chief Financial Officer John McLean said the current timeline will see bonds sold by mid-October of this year.
CFPUA plans to meet with the Local Government Commission (the organization created by the state to oversee borrowing by local governments and government utilities) in Raleigh on August 27 to go over CFPUA’s feasibility study for the construction project, as well as the utility’s preliminary statement.
On September 4, the Finance Committee will discuss the issue followed by a meeting of CFPUA’s board on September 11, when board members will vote both to award the construction contract and the bond order.
Assuming the board approves the project – and the bond – CFPUA will have to determine the rating for a bond. On September 16 and 17, CFPUA staff will meet with Moody’s and Standard and Poor’s, two of the ‘big three’ credit rating companies. CFPUA would then expect approval of the bond issuance from the LGC on October 1 and would price and sell the bonds starting Oct 17.
Also at the September 11 meeting, CFPUA will likely decide whether or not to defer the debt service on the project for a year, according to McLean.
Essentially, the decision to defer means whether to enact the rate increases in October, or not until the upgraded plant facilities comes online — expected in 2022.
According to CFPUA spokesperson Vaughn Hagerty, CFPUA has been “looking at how the impact on customers’ bills might be deferred until the plant becomes operational in 2022. The $43 million is what we would need to borrow if the rate increase occurred when the bonds are sold. The $45 million is what we would need to borrow to put off a rate increase until the plant comes online. The difference represents the payments that will be due to bondholders between the time we issue the bonds and when customers see increases in their bills to begin covering those bond payments.”
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