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Village to borrow for new well PDF Print E-mail
Written by MARK JAEGER   
Wednesday, 21 January 2015 19:26

Trustees decide to put financing burden on tax bill, not water bills

Faced with some high-level financing options, the Saukville Village Board decided this week to rely on general obligation bonds as the sole source to pay for $3.4 million in 2015 capital expenses.

Trustees unanimously voted Tuesday to set the borrowing process in motion, asking that an initial resolution authorizing the borrowing be prepared for the board’s second meeting in February.

A March bond sale is anticipated.

Among the projects included in the spending plan is a new municipal well, which financial advisor Mike Harrigan of Ehlers said opened the door to using water revenue bonds for part of the spending.

That approach, Harrigan said, would allow the village to pass the anticipated cost of more than $2 million for Well No. 6 to the village’s water utility.

However, an Ehlers analysis showed relying on general obligation bonds to cover the water tower costs and about $1 million of additional village spending would save more than $420,000 in principle and interest

Even with the bonding, the tax rate is expected to be minimally affected. Debt obligation was responsible for $2.79 per $1,000 of property value in 2014, and the new bonding would keep that rate in the range of $2.84 per $1,000 of valuation.

After reviewing a variety of financing options, Trustee Dan Sauer summarized the sentiment of the entire board.

“I think going with general obligation bonds makes the most sense,” Sauer said.

Folded into the borrowing will be $170,000 for a dump truck that the department of public works had scheduled to purchase in 2016.

Officials felt it made sense to take advantage of favorable interest rates and move the purchase up a year.

The decision to start the bonding process was made knowing that the village still needs authorization from the state’s Public Service Commission before it can borrow for the new well.

With all the anticipated borrowing, Harrigan said the village would be at 75% of its borrowing capacity.

That is about at the threshold where additional debt could jeopardize the village’s bond rating, according to Harrigan.

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