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Age and increasing demand are impacting our utility systems. While the City has been making strides in improving these systems by replacing aging infrastructure, there is still work that needs to be done.
First, we are working to ensure that the City of Robinson will have adequate water to meet the needs of our customers for years to come. Our water treatment plant, which was built in the early 1990s, is nearing capacity, and some of its processes are reaching the end of their useful service life. To continue to meet current and future demand, half of the debt issued with these bonds, along with funds the City has already set aside, will be used to upgrade and expand our treatment plant, incorporating the newest processes to meet changing standards to ensure safe drinking water for our customers.
The remaining half of the debt issued will be used to improve the wastewater system, including expanding and upgrading the Industrial lift station, which is at capacity, and continuing to replace problem sewer lines.
Certificates of obligation (CO) bonds are a form of long-term borrowing that cities can use to fund major capital projects. They are backed by the full faith and credit of the issuer, which includes the power to tax its citizens. While ad valorem taxes guarantee these bonds, repayment of them will be funded 100% from fees charged to utility customers. CO bonds are not required to be approved by the voters. However, before the City can issue CO's, the City Council must approve a resolution stating the City's intent to issue the certificates. A notice must be published in the newspaper at least 45 days before the sale date stating the maximum amount to be issued, what the proceeds will be used for, and the date and time of the planned sale, along with additional information about the City's currently outstanding debt obligations.
The City has the option to issue revenue bonds, but those types of bonds have higher interest rates and require a reserve fund. Both revenue and certificates of obligation bonds increase borrowing costs and result in higher costs to our utility customers.
The City of Robinson's AA- bond rating, financial policies of maintaining adequate reserves, retiring debt in a responsible time frame, strong debt management policies, and regular audits lowers our borrowing costs, saving money over the life of the bonds.
The repayment of these bonds are spread out over 20 years, so costs are shared by current and future utility system users.
Funding for repayment of these bonds was included in the recently adopted Utility Fund Budget and are included in the new rate structure to be effective January 1, 2024. For a snapshot of city issued debt click here.
Feedback can be provided in person or online during citizen comments at the October 3rd and November 7th city council meeting beginning at 6 p.m. How to attend in person or online can be found in the meeting agenda packet or in the calendar information for the meeting.
Streets are funded through the tax rate, not the utility rate. Utility related projects are the focus with this set of bonds, which will be supported through utility rates.
Projects included in the issuance of the 2023 CO bonds are to ensure the city can continue meeting customer demands and include the following:
The City’s current total debt obligation secured by property taxes is $32,355,000. Of that amount, $14,255,000 is supported and paid through ad valorem taxes. The remaining $18,080,000 is supported and paid for through water and wastewater revenues. Taxes will only be used to repay this debt if water and wastewater revenues are insufficient to pay the obligations.
Click here for the FY2023-2024 Adopted Budget, which provides a debt snapshot and a summary of the Utility Fund.