March 20, 2007
Bond and rate proposals offer benefits to sewer ratepayers
King County sewer ratepayers will continue to benefit from infrastructure upgrades and a stable monthly rate under two proposals submitted last week to the King County Council by King County Executive Ron Sims.
The first proposal would authorize the issuance of up to $250 million in sewer revenue bonds to fund capital projects being carried out by the Wastewater Treatment Division in 2007. The second proposal would strengthen the security of those bonds, and subsequent yearly bond issues, allowing the extension of the repayment term to 40 years. The longer term bonds would reduce annual debt service costs and minimize impacts to the county's monthly sewer rate and capacity charge.
The proposal structures capital financing to ensure that the future ratepayers who will benefit from the infrastructure investments King County is making today will pay their fair share of the cost of the investment. The annual debt service reductions yield savings of $3 per month on the capacity charge projected for 2008 and more than $6.00 per month on the capacity charge projected for 2011. Further, the proposal saves $1.05 per month on the 2009 sewer rate, $1.30 in 2010 and $1.50 in 2011.
As a wholesale provider of wastewater treatment services at two regional plants in Seattle and Renton, King County's wastewater utility has historically relied on long term sewage disposal contracts with its 34 component agencies as security for its bonds. These contracts are scheduled to expire in 2036, limiting the county's financing options to shorter term bonds that are ultimately more costly for ratepayers.
Sims' proposal would enable the county to extend rate guarantees to the bond buyers for a longer period while continuing to negotiate contract extensions with the component agencies.
Ratepayers are already saving $1.0 million a year on existing bonds that were refinanced in late 2006 following decisions by Moody's and Standard & Poor's to upgrade or maintain the county's exceptionally high bond rating. See http://your.kingcounty.gov/exec/news/2006/0428sewer.aspx for more information.
The county plans to issue more than $1 billion in revenue bonds through 2010 to finance the Brightwater treatment system and dozens of other projects that will provide needed capacity to serve population growth while ensuring that the current system continues to operate reliably.
The King County Council is expected to vote on the proposals in March.