2016.02.08 Council Agenda Item 05
Summary
Order to approve a supplemental appropriation in the amount of $5,900,000 from either (i) the sale of bonds to be authorized through a future bond order or (ii) from funds to be provided by the Portland Water District through a contractual agreement with the said District if the District finances the Mill Creek Project through the sale of its bonds, with revenues received through sewer rate payers to fund the borrowing in either scenario.
A public comment period will be included with this item (3 minutes).
ACTION: Council action is anticipated.
Description
The Mill Creek Pump station was constructed in 1981. It and its associated force mains are scheduled for replacement and reconstruction in 2016.
The Council recently authorized a bond order to sell revenue bonds through Maine Municipal Bond Bank (MMBB) and the sewer revolving loan fund (SRF). The MMBB reviewed our application this week and determined that while they have authorized revenue bonds in the past for a town department that is not considered a stand alone district (including Falmouth in 2006), they are no longer willing to authorize anything other than a general obligation bond sale. In order to stay on construction schedule, we are now working with the Portland Water District to have them sell the bonds with anticipated approval from the MMBB. In this scenario, there will be a contractual agreement between Falmouth and the Water District to allow the town to lease and manage the improved systems and to make payment for Falmouth’s share of the borrowing to the Water District. This is a developing model that will be considered by the Water District at its meeting later in February. We have received indications that this model should be acceptable to the Water District.
If the model is not satisfactory to the Water District, Town or MMBB, we will float bond anticipation notes until a June referendum where the Falmouth voters will be asked to support a general obligation bond with the SRF program through the MMBB. Finally, if a referendum is necessary and it does not pass, the Council will need to authorize an open market revenue bond however the interest rate will not be subsidized through the SRF program.
The project is necessary and must proceed regardless of how it is financed but staff are confident that the town will be able to access the lower rates through the SRF program. Staff are requesting approval of this order now rather than after agreements are finalized because there is a deadline to award the project to the lowest bidder. If the town misses this deadline of February 15, there is a chance that the project costs will increase.
