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The City of Mountain Home will officially be getting some upgrades after City Council members voted to approve the sale of $10 million worth of bonds to upgrade the city’s wastewater treatment plant.
During the sale, the city received buy orders for $20 million, allowing the city to lock in a 20-year 3.95% interest rate for the $10 million in bonds it requested. The bonds were covered by a bond insurance commitment from Build America Mutual, allowing them to be marketed as AA bonds.
The sale of the bonds was overseen by Crews & Associates, Inc. and will be officially finalized on June 23. Revenue from the city’s water facilities will go towards the payment of the bonds.
“I can tell you, all around the country, bond pricing has been a little bit of a challenge lately,” said Paul Phillips, the managing director for Crews & Associates. “As I mentioned earlier, we had $10 million. We got orders just shy of $20 million during our one-hour order period, with more orders than bonds. We’re able to then, if you will, ratchet down the interest rates that we had solicited orders at and move the rates down three to four bases points. And then, we ended up with a bond yield of 3.995% on a 20-year final maturity structure.”
During its February meetings, City Council approved nine separate ordinances for the departments, ranging from purchasing new trucks to purchasing new pumps for its water and wastewater stations.
City Council also agreed to accept three agreements with Garver, an employee-owned multi-disciplined engineering, planning, architectural, and environmental services firm, to develop a 2022 Water and Sewer Master Plan update, complete improvements to the city’s wastewater treatment plant, and evaluate and design improvements to the Southwest Collection System for the city.
The City of Mountain Home’s plans to overhaul and update its water facilities has been years in the making.
Much of the city’s equipment is older, with some of its water pumps being 30 years old. Finding replacement parts for equipment has also become difficult over the years as much of the city’s tools and equipment are proprietary.
Costs for operating the plants have also gone up over the years. Currently, Mountain Home uses chlorine and sulfur dioxide gas to treat the water that citizens use in their daily lives. The gas has seen a spike in cost as the U.S. economy struggles with inflation.
The city’s sewer systems have also been running a deficit over the past few years. While the city has found ways to cover that deficit, the days of covering down are ending as the deficit is expected to climb to 50% by 2024, potentially driving up consumer rates.
To combat these difficulties, the city has begun to look at switching over to a new UV light system for its water treatment facilities and replacing much of its aging equipment. The move to the new system will lower costs for the city in the long run while also making the city less reliant on dangerous gas shipments coming in from chemical plants.
Once completed, the city expects to turn its deficit into a surplus over time. Money raised from the sale of the bonds is earmarked to be used to complete the city’s water facility projects and may not be used in a general manner.
