Water bond sale OK’d with some conditions

Jeff Schweers

Tuesday, June 3, 1997 | 11:32 a.m.

The Southern Nevada Water Authority can sell up to $750 million in bonds to help pay for the expansion of the regional water system, but not all at once, a debt oversight panel has ruled.

The Debt Management Commission on Monday authorized the full amount, with the understanding that the water agency could sell up to $500 million without seeking additional permissions.

"Some of us are a little concerned about authorizing all $750 million in one fell swoop," said Chairman Myrna Williams, a member of the County Commission and president of the Las Vegas Valley Water District Board of Directors.

While the bonds are going to be used to finance construction of the $2 billion regional water system that would support 2.5 million people, the actual sale of the bonds will be decided and scheduled by the Las Vegas Valley Water District.

Williams said she would ask the board at its June 17 meeting to authorize the sale of $500 million now, and then require the water authority to come back and ask for the remainder when they run out of money.

The water authority still has $270 million in unused funds -- $135 million from past bond sales and $135 million in authorized bonds that haven't been sold yet. All but $25 million will be spent by next March, officials said.

"It is possible for us to authorize the $500 million with no detrimental effects (to taxpayers) and not impede the water district," Williams said. "This doesn't nullify our commitment for the full $750 million."

Making matters more attractive was the approval Monday by the Legislature of a bill allowing the sale to go through the state bond bank, Williams said, allowing the agency to use the strength of the state's bond rating to get a lower interest rate.

Water authority officials said they could accept those conditions because the project is being phased in over time, and bonds will be sold only when the agency runs out of available funds.

"We only build what we need to build when we need to build it," said Dick Wimmer, deputy general manager for the SNWA. "The next step is for the water district board to approve what they feel comfortable with."

Wimmer said the first sale would take place next April, followed by subsequent sales in 1999 and 2000, until the full amount is sold.

"This is designed to take us to the spring of 2000," Wimmer said.

Only $40 million will be used to finish current construction projects for the 1999 phase to meet existing needs, while the remaining $710 million is reserved for 2000 and 2002 construction projects to meet future growth demands.

The panel was concerned about authorizing the full amount with no certainty as to how the bonds would be paid off.

"I know you folks are aggressive but not so aggressive this doesn't reflect the quarter-cent sales tax increase," commission member Greg Jensen said, referring to the SNWA's bill in the Legislature to help finance the system.

Wimmer said the funding plan doesn't anticipate the quarter-cent increase, which could cover 30 percent of the system's costs, thereby reducing the share supported by connection charges and water rates.

"The funding plan is in place, the actual revenue is in place to fund $250 million of this resolution," Wimmer said.

Rates and connection charges would have to be raised to pay off the remaining debt, even if the quarter-cent sales tax is approved, he said.

Regional connection charges would go up $10,000 by 2020, with the sales tax, but they would increase $17,000 without the tax. Likewise, regional rates would quadruple without the tax increase, but would still more than double with the increase.

Even local rates are subject to increase with or without the sales tax increase, Wimmer said.