|
Getting your Trinity Audio player ready...
|
The Pleasanton City Council approved a resolution last week declaring the city’s intent to reimburse any money spent on capital improvements made to the city’s water system with future bond dollars.
Even though the council did not formally vote on issuing any water revenue bond — that item is set to come before the dais in September — the resolution allows the city to recover any hard costs recently spent on water-related projects.
“I think it’s essential that we’re going to need to pass bonds so we can get these projects moving,” Councilmember Craig Eicher said during the special Aug. 11 council meeting. “Delaying doing this is just going to make things a little bit more challenging for us in the future.”
Over the past few years, city staff have been working on ways to strengthen the city’s water enterprise fund, which supports capital improvement projects to the city’s potable water system, and develop further funding strategies to begin addressing over $73 million in infrastructure, operational and maintenance needs.
According to public works director Siew-Chin Yeong, the goals for the water system capital improvement program are: replacing aging infrastructure to maintain or improve system reliability and operability, improve water system capacity, comply with regulatory requirements and align with the city’s strategic plan goal of investing in the environment.
These projects are part of the city’s larger efforts to improve several aspects of the city’s water system. The overall effort is collectively referred to as the “2026 Water Project”, which will look to improve water system capacity, reliability, and supply diversification, including advancing the city’s efforts to restore local groundwater production by developing new wells.
In order to fund these needs, the council approved a Water System Management Plan which, in addition to increasing the city’s water rates, outlines the city’s intent to deliver on those needs over the next five years through the issuance of $16.5 million in water revenue bonds. The city previously issued $19 million in similar water revenue bonds in 2024.
These bonds, according to city staff, will go toward funding four main projects: the groundwater supply project, water meter and related infrastructure replacement, annual water distribution system improvements and water system emergency power improvements program.
While Yeong said the city is looking at a total cost of about $56.6 million, the 2024 bonds and increased water rates will all significantly support these projects.
Even though the council didn’t formally vote on the bond details — last week’s vote simply allows the city to reimburse itself if it spends money on water-related projects from 60 days before the vote until the bonds are issued — the council spent time talking about a 20-year repayment plan versus a 30-year term.
According to city finance director Susan Hsieh, staff have been working with its financial advisor to consider public sale versus bank loans with different repayment schedules. Currently, the top two considerations seem to be a 20-year and 30-year public sale bond.
The main difference between the two being that a 20-year sale will have a lower interest rate at 3.96% but higher average annual debt service at just under $1.1 million. The 30-year public bond sale, on the other hand, has an average annual debt service of just under $916,000 but an interest rate of nearly 4.5%.
“A 30-year bond is going to cost about $5.5 million more than a 20 year bond,” Hsieh said.
The total debt service for the 30-year public sale bond is about $27.47 million, Hsieh said.
“As long as we generate revenues from the water system or from the ratepayers, we should be able to pay the bond,” Hsieh said.
Hsieh said staff will be recommending the 30-year repayment for several reasons, with the main one being retaining financial flexibility for unexpected capital needs.
However, several councilmembers signaled they would like to see more analysis on the financial impact from the 20-year versus 30-year plans.
“With the rate increase, we expect sufficient revenues to cover the debt service payment at the 20-year level as well,” Hsieh said. “We have sufficient funds to cover the cost.”
Councilmembers Julie Testa, Matt Gaidos and Mayor Jack Balch all signaled the desire for the city to look more into the 20-year option.
Gaidos said he’d want the city to consider further discussions over the 20-year bond issuance versus the 30 years given the recent rate increases and given how there is sufficient money in the city’s water enterprise fund.
“Given what we’ve passed on to our ratepayers and how well that seems like it’s going to be funded, that seems to be good math in my opinion,” Gaidos said.
Balch also pointed out that the actual interest rate the city would observe when they place the debt would be less than what the city assumed in its water rate study and rate plan, meaning they’d be able to utilize that additional interest rate savings to possibly do a 20-year plan and save the city about $5.5 million.
According to staff, the city’s financing team will work on obtaining the credit rating for bond issuance this month and return in September to seek council approval for the bond sale.
After that, if approved, staff will work on finalizing the bond offering documents and issue the bonds in order to begin receiving money by mid-October.
Lifetimes of faith: Catholic Community of Pleasanton celebrating 125th anniversaryAugust 27, 2026 8:27 pm
‘He was such a good kid’: Granada alum ID’d as passenger killed in Monterey crashAugust 26, 2026 9:06 pm