Mountain Regional OK’d for $8.8 million bond
December 5, 2014
In anticipation of the future growth sure to hit Summit County, Mountain Regional Water received approval from the Summit County Council on Wednesday to levy an $8.8 million bond over the course of 20 years to improve its water systems.
The council agreed to allow Mountain Regional to levy the bond to finance improvements to ensure the availability of water for years to come. Of the $8.8 million, approximately half will be repaid by Promontory Development and the other half by Mountain Regional Water customers.
"We do master plan and we do anticipate what our growth is going to be to make sure our supply stays ahead of that," Mountain Regional Water General Manager Andy Armstrong said. "We’re trying to strengthen our groundwater system by having an additional well, so we are not entirely dependent on surface water because we believe it is extremely beneficial to have a mix of sources for our customers."
Mountain Regional Water plans to make improvements to a system in an area that is expecting substantial future growth, with plans for the bonding mechanism to finance those improvements.
"We’re planning on a lot of upgrades to our water system to make it more resilient," Armstrong said. "We’re putting in additional wells, updating a couple of our pump stations and doing more line work."
The bond will be repaid over a period of 20 years from three different revenue sources: existing customers; wholesale water sales to other providers; and impact fees from new growth.
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Mountain Regional Water customers shouldn’t anticipate any increases in rates or impact fees as a result of this bond, he added.
"Our impact fees are set by state statute and we did a pretty exhaustive impact fee analysis that identified the capital improvements we need to do to support our upcoming customer base," Armstrong said. "The impact fees are less than they were because what’s happening is as we are getting a little more established and we are moving from a company that generates our revenue based off of new growth, to generating our revenue based off of existing customers.
"In 20 years, most of our revenue will be sales from existing customers and not impact fees," he said. "We’re transitioning to that right now."
When County Council approved the bond, it established a mechanism for Promontory to pay back their portion of the bond by designating an assessment district and acknowledging Promontory as the sole property owner.
"One of the things they touched on is obviously everyone has read about the Jordanelle situation where there is a lot of infrastructure and not a lot of customers," Armstrong said. "This bond with Promontory is different because they heavily collateralized the loan."
Rich Sonntag, managing director of Promontory, said roughly half of the improvements Mountain Regional Water is proposing will directly accommodate future growth at Promontory.
"We are basically putting up an improvement district as collateral for half of the bond to help sell the bonds and that basically helps fund the portion of the infrastructure that will be located on Promontory," Sonntag said.
The bond will help fund a large water tank that will provide storage and water flow capabilities.
When people buy a lot of land, the impact fees will essentially go to paying off the obligation, Sonntag said.
"Mountain Regional is a large water district," Sonntag said. "And the things they are doing down in the valley are providing additional backup water source capacity for the future."
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