Water Bill Bond Surcharge
In 1974 Congress passed the Safe Water Drinking Act (SWDA). EPA set the standards to be met under this Act.
To conform to the EPA standard of the Act, water suppliers had to review the facilities in place and determine if it would be necessary to modify or upgrade.
As EPA lowered the amount of turbidity allowed in drinking water, it was determined in the early 1990’s that it would be necessary for the SWLCWD to build new water treatment plants to meet these requirements. The cost of this project was estimated at $5 million.
The SWLCWD approached the Rural Utilities Services (RUS) group within the US Department of Agriculture who were providing loans and/or grants to rural utilities that might not be able to self-fund needed new infrastructure, a position the SWLCWD was in. RUS agreed to provide needed funds in the form of a $2.1 million loan and a $2.9 million grant.
To obtain the loan, the SWLCWD would have to obtain voter approval for a bond levy, which bonds RUS would buy. The second condition was the SWLCWD must keep one year’s payment of $128,940 in a Bond Reserve Fund (BRF).
The bond levy was approved by the district voters in 1997.
To establish the required Bond Reserve Fund, water users within the District were allowed to make an initial one-time payment of $1,750 up front for their share of the loan repayment. Enough water users within the District elected to make the $1,750 prepayment to fund the initial BRF.*
The remaining water users are subject to a monthly $9.20 bond surcharge. The monthly bond surcharge paid by the water users is moved to the BRF so that sufficient funds are always on hand to make each year’s payment due to RUS ($9.20 X 12 X 1250 = $138,000). The loan with RUS will be paid off December 11, 2027.
*The System Development Charge is subject to increase in future BRF prepayments.