(Kansas City, Mo.) – Last week Kansas City Water Services issued water revenue bonds at a low interest rate of 3.24 percent, which will enable Water Services to perform $56.2 million in vital water infrastructure improvements throughout Kansas City.
“We’re only able to make these important infrastructure improvements because of the support of our voters,” said Mayor Sly James. “This bond sale achieves cost savings, creates jobs, boosts economic development, and improves the system for customers. I’m proud of the work Water Services is doing to invest in the City’s infrastructure, which will serve Kansas Citians for generations to come.”
These bonds, which will be used to fund water main replacement projects as well as treatment and pump station improvements, were issued using the last of the remaining $54.365 million in authority from the August 2005 election and included a net premium of $2 million. In addition, according to the U.S. Department of Commerce’s Bureau of Economic Analysis, $56.2 million in bonds will result in the creation of nearly 1,100 direct and indirect jobs.
“Water Services is proud of its strong bond rating, which ultimately results in lower borrowing costs and more dollars for improving our water infrastructure,” said Water Services Director Terry Leeds. “Thanks to strong voter support in authorization of municipal revenue bonds, we are able to finance a portion of our capital improvements.”
These bonds will play a large role in funding Water Services’ strategic and data-driven Water Main Replacement Program. Through this program, Water Services will annually replace 28 miles of critical water main in areas of the city that are statistically proven to have water mains that are likely to fail. This proactive work means fewer water main breaks, meaning fewer frustrating service interruptions for customers. And, once replaced, these pipes should last for up to 100 years.
Water Services’ underlying credit ratings on the transaction were AA+/Aa2 by Standard & Poor’s and Moody’s Investors Service, respectively. According to Standard & Poor’s, its AA+ rating reflects a “strong and diverse service area economy” and “strong liquidity.” According to Moody’s Investors Service, its Aa2 rating indicates the system is part of “a stable regional economy” and has a “favorable debt profile.”
Water Services continues to achieve savings through borrowing at low interest rates and timely refinancing. On November 4, 2011, $97 million in wastewater bonds were issued at 3.93 percent for a period of 25 years. On February 7, 2012, $52 million in water bonds were issued at 3.27 percent for a period of 25 years. On November 29, 2012, wastewater bonds were issued at 2.86 percent for a period of 25 years. On February 27, 2013, water bonds were issued at 3.14 percent for a period of 25 years. For this issue, which was sold on May 8, water bonds were issued at 3.24 percent for a period of 25 years.
The bonds were sold at competitive sale with the winning bid submitted by Piper Jaffray.
FirstSouthwest and Moody Reid Financial Advisors served the City on the transaction as co-financial advisers. Gilmore & Bell, P.C. and Martinez Madrigal & Machicao, LLC served as co-bond counsel. Disclosure counsel was handled by Kutak Rock and the Hardwick Law Firm.
For additional financial information, please contact Tammy Queen, City Treasurer in the Finance Department, at 816.513.1024 or tammy.queen@kcmo.org.
For additional Water Services information, please contact Jennifer Rusch, Media Relations Coordinator for Water Services, at 816.513.0284 or jennifer.rusch@kcmo.org.
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KC Water maintains and operates water treatment and distribution systems, stormwater management systems, and wastewater collection and treatment systems for residential and business customers in Kansas City and for wholesale customers in the Kansas City area. KC Water is primarily funded by fees charged to customers based on their use or impacts on the three utility systems.
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