KC Water Lowers Borrowing Costs in Latest Bond Sale

WRITTEN BY: Michael Grimaldi

Paying for a water system is like buying a house. The cost is enormous vs. the month-to-month budget, so you borrow for the long term. Like any responsible homeowner, KC Water looks for the lowest interest rate possible when borrowing money to build and maintain Kansas City’s pumps, pipes and treatment facilities.

KC Water did just that in February by issuing the Series 2018A wastewater revenue bonds totaling $180.2 million at an average interest rate of 3.40 percent.

These bonds, which voters approved in 2012, will fund wastewater treatment, collection systems and pump stations improvements, as well as projects related to the federally-mandated Overflow Control Program, now known as the Smart Sewer program.

In addition, KC Water issued the Series 2018B bonds, which will replace bonds previously issued in 2009 and had interest rates averaging near 5.11 percent. This refinancing will save KC Water roughly $5.6 million in debt service payments.

“KC Water is pleased to be able to take advantage of the ability to issue tax-exempt municipal bonds, which results in lower borrowing costs and ultimately savings for our customers,” said KC Water Director Terry Leeds. “Our staff is committed to managing the Department’s resources effectively and efficiently, and our bond ratings reflect that commitment.”

Ratings firms agreed: Standard & Poor’s affirmed KC Water’s AA rating and Moody’s Investors Service affirmed the utility’s Aa2 rating for the bond sale.

KC Water “continues to complete projects on time and on budget in order to comply with a consent decree while maintaining healthy debt service coverage,” Moody’s said. “We expect the enterprise’s tenured management team will maintain healthy financial metrics going forward, despite significant future borrowing plans.”

City Manager Troy Schulte said “While many cities around the country are grappling with infrastructure challenges, I’m pleased with how KC Water is taking the lead and investing in Kansas City’s infrastructure, benefiting today’s customers and future generations.”

For more information, visit kcwaterservices.org/?p=3878.