July 24, 2008 issue
Boone Begins Bond Referendum Process for Water Upgrades
Town Proposes To Issue $25 Million in General Obligation Bonds To Finance Project
Story by Kathleen McFadden
The Boone Town Council will meet at 9:00 a.m. on Thursday, July 24, to vote on a resolution authorizing the town’s finance director to apply to the Local Government Commission for approval of a $25 million issue of general obligation bonds.
That $25 million is the estimated cost of bringing a new raw water intake online, building the transmission lines to the current water treatment plant and upgrading the plant to increase its capacity.
Before the bonds can be issued, however, Boone voters must approve the debt, and current plans are to have the bond referendum on the November ballot.
“We’ve been talking for a while about water and the cost associated with water,” said Town Manager Greg Young. “To pay for it will entail some method of financing.”
Approval from the Local Government Commission is one of the first steps in the bond issue process. The LGC must approve local government indebtedness exceeding $500,000. According to Young, the LGC will review the town’s application at its September meeting.
Once that approval is granted, “a number of steps will take place,” Young said.
The town has retained bond counsel—Parker Poe Adams & Bernstein LLP of Charlotte—that will provide legal services related to the bond issue, as well as prepare all the applications and filings.
The town has an option to purchase land along the New River in Todd, the proposed site for the new raw water intake, and the mandatory environmental assessment is currently underway. Once that assessment is completed, the town can proceed with permit applications. Not only will permits be required for the new intake, but also for the increase in capacity at the water treatment plant from 3 million gallons per day to 4.5 million gallons per day.
Design work for the pumping station at the new intake, for the transmission lines and for the plant upgrade will also be required.
All told, Young said, the process is anticipated to take two years.
The current estimate for the project is $19 million, he continued, but because groundbreaking is two years in the future, the town has added a contingency in anticipation of price increases over the next 24 months and is applying for $25 million.
“I don’t think we’ll finance that much,” Young said, “but once a bond issue is approved, you can’t go back and ask for more.”
Over the past several years, the town has been raising water and sewer rates in anticipation of the project and currently has approximately $800,000 set aside in capital reserve funds, he said. “The intent is to pay the bond indebtedness with money from the water and sewer rates,” Young explained.
But all these plans depend on the result of the referendum vote. Boone voters must approve the bond issue for the water upgrade project to move forward.
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