Staff recommends approval of the resolution authorizing the issuance and calling for a public sale for the West End Reservoir bonds.

Securing a second source of treated water for the City of Billings has been a Public Works Department priority and building a new West End Reservoir and Water Treatment Plant meets that goal and the long-term water needs for our community. The City has purchased approximately 300 acres locate north and south of Hesper Road between Shiloh and 48th Street West.

Public Works has been able to pay for costs with cash collected from current utility rates, but will need to sell bonds to finance the projects.    The Plant construction bid is scheduled to be awarded in May and the Reservoir bid in July or August. City staff will determine the best option of issuing the water system revenue bonds in one or more series.  The resolution gives authorization for either option.  If the bonds are issued in one series the term will be approximately 20 years and up to 31 years for two bonds.  For both options the aggregate principal amount would be $110,000,000 with an average interest rate of 5.75%.

A resolution has been submitted for approval to set the limits for the principal amounts, the interest rates and the maturity of the bonds.

City Council may:

• Approve; or,
• Not Approve the resolution. Not approving the resolution will cause the project to not be completed.

By issuing one bond before the contract is awarded for the Reservoir could result in over or under borrowing.  By waiting until the bids are awarded to issue a second bond, there will be an uncertainty of the interest rate at the time of the pricing the second bond. 


The actual interest rate will be determined at the time of the pricing of the bonds, which will drive the total cost of borrowing.