To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
From: Mark Marlowe, director of Castle Rock Water
Nichol Bussey, Business Solutions Manager
Paul Rementer, Enterprise Fund Analyst
Title
Ordinance Authorizing the Issuance and Sale of Water and Sewer Enterprise Revenue Bonds, Series 2025, Payable Solely Out of the Net Pledged Revenues to be Derived from the Operation of the Town’s Water and Sewer Enterprise; Providing Other Details Concerning the Bonds, Including, Without Limitation, Covenants and Agreements in Connection Therewith; Providing Other Matters Relating Thereto (Second Reading - Approved on First Reading on July 15, 2025, by a vote 7-0)
Body
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Executive Summary
The purpose of this memorandum is to seek Town Council approval on first reading of an Ordinance (See Attachment A) authorizing the Mayor, Town Manager, Finance Director and Director of Castle Rock Water (CRW) to implement the sale of water and sewer enterprise revenue bonds at a time determined to be best for CRW within one year of the date of approval of this Ordinance on Second and Final Reading in accordance with the following parameters:
• Par Amount: The bonds may be issued in an amount not to exceed $56 million.
• Maturity: Bonds will mature no later than December 1, 2045, with maximum annual principal not exceeding $7.7 million with total repayment costs not to exceed $95 million.
• Interest Rate: Not to exceed a net effective rate of 4.75%.
• Redemption Provisions: The Bonds may be sold with a provision for optional redemption prior to maturity, at a price not to exceed 100%.
• Sale: The bonds will be sold via negotiated sale to Stifel, Nicolaus & Company, Incorporated.
• Parity Lien: The 2025 Bonds will share an equal lien on Net Pledged Revenues with existing Parity Bonds from 2015, 2016, and 2022.
• Reserve Fund: May be established, and if so, funded with bond proceeds or a Reserve Fund Insurance Policy.
• Bond Proceeds Use: Funds will be allocated to a Project Fund for Water and Water Resource capital improvements (see Discussion for further details), a Reserve Fund (if required), and to cover issuance costs.
The specific capital improvements that the bond proceeds may be used to fund include project costs associated with the Water Infrastructure Supply Efficiency (WISE) project for construction of a desalinization facility or alternate facilities to meet total dissolved solids concentration requirements by 2030; pipeline, pump station, well and treatment infrastructure associated with the Box Elder project; the Plum Creek Central Pipeline; the Plum Creek to Rueter Hess Reservoir Pipeline and Pump Station; capacity in the Rueter Hess Water Purification Facility; storage in the Chatfield Storage Reallocation Project; and / or the Plum Creek Diversion Project.
Budget Impact
The budget impact of this bond ordinance will be fully determined when and if CRW moves forward with an actual debt issuance. The bond ordinance will provide CRW with one year to determine its exact needs up to $56 million, find an acceptable interest rate at or below 4.75%, and go to market. The maximum annual debt cost will be $95 million.
Staff Recommendation
Staff recommends approval of the ordinance on first reading as introduced.
Proposed Motion
“I move to approve the Ordinance as introduced by title.”
Attachments
Alternative Motions
“I move to approve the ordinance as introduced by title, with the following conditions: (list conditions).
“I move to continue this item to the Town Council meeting on _____ date to allow additional time to (list information needed).”
Attachments
Staff Report
Attachment A: Ordinance