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Carefree Truth
Issue #942, August 16, 2021
Issue #942, August 16, 2021
Carefree Water Company (CWC) manager Greg Crossman reported that on June 7th, 2006, the Town of Carefree entered into an agreement with the United Community Facilities District (UCFD), which is the sole shareholder of the CWC, for a capital advance in aid of construction and improvements of the water facilities. The amount advanced was originally $2.3 million, but after 2 revisions in 2011 and 2012 the final amount came to $3.2 million. The Town and the District entered into a repayment agreement for principal only, no interest.
The original bond debt repayment, which began in 1998 when the water company was purchased, was $414,000 per year, and repayment was finished in June of 2018. To make the repayment of the debt to the Town seamless for the water company customers, the payments to the Town, which began in December of 2018, were also $414,000 per year, due to be completed in June of 2026. $1.24 million has been repaid to date.
The bonding effort for the Consolidation Project was approved on July 27th, 2021, and bonds will be sold soon. The modification of repayment to the Town was being requested because investors and bond rating agencies prefer the debt coverage ratio to be 1.2. This means that the collections from customers must be about 20% more than the amount needed to repay the bond holders. If the current $414,000 repayment schedule to the Town continues in the early years of the new bonds, coverage would be pulled below 1.2.
The total repayment amount remains the same, but the payment schedule is extended 2-1/2 years to December 31, 2028. This would provide the District with a continuous 1.2 debt coverage, the highest bond rating, and the highest investor appeal, in order to get the lowest rates for the Water Company customers. The District and the Water Company Board had approved this request. If approved by the Council, this would be the acceptance by the Town.
Mayor Les Peterson asked Gary Neiss what interest rate the Town's Reserve Fund is getting. Mr. Neiss replied that it is less than 1%. Mayor Peterson reiterated that this revised repayment schedule would help get a better bond interest rate.
The Council unanimously approved the execution of addendum item #3, the modification of the repayment schedule of the capital advance in aid of construction and improvements of the water facilities.
https://vimeo.com/583632106
Lyn Hitchon
Prepared by Carefree Truth
Copyrighted
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The original bond debt repayment, which began in 1998 when the water company was purchased, was $414,000 per year, and repayment was finished in June of 2018. To make the repayment of the debt to the Town seamless for the water company customers, the payments to the Town, which began in December of 2018, were also $414,000 per year, due to be completed in June of 2026. $1.24 million has been repaid to date.
The bonding effort for the Consolidation Project was approved on July 27th, 2021, and bonds will be sold soon. The modification of repayment to the Town was being requested because investors and bond rating agencies prefer the debt coverage ratio to be 1.2. This means that the collections from customers must be about 20% more than the amount needed to repay the bond holders. If the current $414,000 repayment schedule to the Town continues in the early years of the new bonds, coverage would be pulled below 1.2.
The total repayment amount remains the same, but the payment schedule is extended 2-1/2 years to December 31, 2028. This would provide the District with a continuous 1.2 debt coverage, the highest bond rating, and the highest investor appeal, in order to get the lowest rates for the Water Company customers. The District and the Water Company Board had approved this request. If approved by the Council, this would be the acceptance by the Town.
Mayor Les Peterson asked Gary Neiss what interest rate the Town's Reserve Fund is getting. Mr. Neiss replied that it is less than 1%. Mayor Peterson reiterated that this revised repayment schedule would help get a better bond interest rate.
The Council unanimously approved the execution of addendum item #3, the modification of the repayment schedule of the capital advance in aid of construction and improvements of the water facilities.
https://vimeo.com/583632106
Lyn Hitchon
Prepared by Carefree Truth
Copyrighted
Visit our website at www.carefreetruth2.com If you know anyone who would like to be added to the Carefree Truth email list, please have them contact me. Feel free to share Carefree Truth with others on your list.
Visit www.carefreeazbusinesses.com to see more info about businesses in Carefree. Please support our merchants.