Boise may turn to bond vote to pay for crucial upgrades at water renewal facilities
In the next few decades, Boise has major projects it needs to take care of in its water renewal facilities — and the city might have a bond vote to pay for them.
Traditionally, the water renewal fund, which is funded through utility bills, is used to pay for projects. In the economic fallout of the COVID-19 crisis, however, commercial water bills are down significantly and some residential customers have fallen behind on paying.
Officials are now expecting the fund to have a $4.2 million shortfall this year as a result, Chief Administrative Officer Heather Buchanan told the Boise City Council during a work session Tuesday.
That shortfall can be covered with money in the fund’s balance, Buchanan said. But with the revenue drop in that and other areas, combined with the fact that the city’s water renewal system is due for crucial system upgrades — many of which cannot be delayed because of regulatory requirements — Boise might have to look for new ways to pay for projects such as for projects like the Lander Street facility, originally built in 1948 and in need of updating.
Buchanan and Public Works Director Steve Burgos presented two possible options to the City Council. One would be a “pay-as-you-go” system of rate increases. To cover the projects, the city would have to raise rates 25% for the 2021 fiscal year, which starts in October, followed by 15% rate increases through at least fiscal 2024.
The second would be bond financing. The exact amount and length of the bonds have not been determined, but Buchanan’s presentation assumed bonds of $67 million in 2022, $135 million in 2025 and $80 million in 2028. Even if Boise voters approved those bonds, there still would be the need for rate increases, but much smaller ones — a 3% increase in fiscal 2021 and 5% through fiscal 2024, according to officials.
The council did not vote on the project, but members spoke positively of choosing the bond financing option rather than the large rate increases. Bonds would help protect utility affordability for customers, they said.
“It’s kind of a fairness question,” said Patrick Bageant. “It’s different human beings who will be paying in 2040 or 2050 than who would be paying now. Those are also the people who would get the benefit of most of this investment. ... To me, that is a strong argument for bond financing here.”
A bond election could come as soon as November, although it also could be pushed to next year. Council President Pro Tem Holli Woodings said she would support putting it on a ballot with other city issues, which she said “creates a really nice package for citizens to vote on.” The next major city election is in November 2021, when three of the six council seats will be up for re-election.
Burgos said his department would continue to move forward on researching bonds, including finding what rates and terms the city would be able to get. The issue would continue to come before the council, he said.
In recent years, the city has passed several bonds, covering the building of new fire stations and the protection of land in the Foothills, among other things.
This story was originally published May 20, 2020 at 1:41 PM.
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