The Macon Water Authority secured a fortuitous $113 million bond deal Thursday to finance nine capital improvement projects, but the money won’t be enough to avert expected rate hikes.
Staff also compiled a list of more than $30 million in deferred maintenance projects anticipated in the FY 2025 budget that are not included in the bond deal and will likely lead to higher water bills.
The authority is expected to schedule another meeting soon to go over the projected rate structure.
“We wanted to give this board as true a picture of what we have in front of us and we’re working as transparently and as quickly as possible to get it all done,” MWA President Ron Shipman told the board at its September meeting when they agreed to pursue financing for the major projects.
While bonds sold this week will fund projects that expand wastewater reclamation facilities and upgrades to the system, the authority needs tens of millions of dollars more over the next few years to grapple with crumbling infrastructure, some century-old pipes and inadequate drainage.
Authority Chairman Gary Bechtel said the bulk of those deferred maintenance costs would come from reserve funds and revenue without adding additional debt.
He mentioned major flash flooding that trapped cars on Zebulon Road in Sept. of 2022.
“If we want to do the necessary repairs to prevent future problems like what we had on that Sunday of Labor Day weekend, we’ve got to have the revenues necessary to do that, which is going to require rate adjustments so we can build this system so it’s reliable,” Bechtel said.
MWA Finance Committee Chairman Dwight Jones suggested a sober approach as the authority listed additional work beyond the bond projects that is necessary to maintain the system.
“You’re really swinging for the fence on the amount of activity we have here,” Jones told MWA Vice President Michel Wanna, who oversees plant and field operations.
“That’s a lot,” Wanna agreed.
In the coming months, they will develop a strategy to schedule and tackle the most pressing infrastructure problems over the next few years.
The bulk of the bonds will fund $54 million in improvements to the Rocky Creek Water Reclamation Facility, including $21 million to replace more than 15,000 linear feet of 42” and 24” sewer mains, $20 million for standby power generators, and $13 million for engineering and design.
Another $29 million is earmarked for pump stations and electrical upgrades at the Lower Poplar Water Reclamation Facility, $7 million will replace 3,000 linear feet of 18” sewer mains on industry-rich Joe Tamplin Boulevard, $6 million for valves at the Amerson Water Treatment Plant and $17 million to replace industrial meters to more accurately bill for water used by its largest customers, which could bring in more revenue.
With lingering supply chain issues and cost overruns that surfaced in the COVID-19 pandemic, Wanna explained that he tries to order necessary materials ahead of time to save money and keep projects on track.
“These days everything is really messed up,” said Wanna, who revised his strategy for keeping projects on track. “Once we get the money, we will buy (materials) up front and then we deal with the labor.”
Stifel, Nicolaus & Company, which solicited bids from financial companies in the bond deal, expects the money to be available after closing the deal on Oct. 22.
The authority first floated the idea of bonds about 18 months ago as they assessed the challenges ahead to expand and enhance the system to have the capacity for future industry and residents.
David Lucas, Stifel’s Macon Financial Advisor, reported the authority’s good bond ratings helped seal the deal.
“The market was always glad to see the Macon Water Authority,” said Lucas, who is not the state senator of the same name. “You don’t come to the market often, and they like our debt. We had a number of good buyers on the issue.”
Stifel’s Trey Monroe noted the reduction in interest rates since July when they first started exploring the market.
In this case, timing was everything because the locked-in lower interest rate resulted in an attractive 3.6% expected return on bond holders’ investment.
That higher return incentivized buyers to pay more than the face value of the bonds, so the issue was “well-received,” Monroe said.
“Investors prefer a premium-priced bond and paid more than 100 cents on the dollar,” Monroe said.
That means the authority receives nearly $12 million from those premium prices, so only needed $102,710,000 in bonds to reap $114,615,134.10 at closing — $113 million for the projects and more than $1.6 million to pay expenses related to issuing the bonds.
“We never really want to try to time the market because it’s going to do what it does, and we caught a pretty nice dip in the market there,” Monroe said.
“Y’all were spot on and we absolutely appreciate it,” Bechtel said. “This money will be spent to bulk up the system and make it more reliable for our customers and clients.”
“At the end of the day it was a timely sale with a good result,” Monroe said.
Hailing preparedness for Hurricane Helene
During Thursday’s meeting, the authority also celebrated the success of Hurricane Helene preparations in its stormwater management division, which is financially separate from water and sewer operations.
Wanna reported 8.55 inches of rain within 30 hours resulted in only six calls about flooding.
“Staff cleaned up everything in downtown even if we cleaned it the week before,” Wanna said. “We have to give it to the staff for the cleaning and the maintenance and everything.”
The $600,000 vacuum trucks deployed before the storm to free drains and lines of debris.
No calls came in from Nowell Estates where persistent flooding has been a problem for decades. Stormwater Director Marvin Land braved the elements three times overnight Sept. 26 to check for flooding and make sure lines were clear.
“People in south Bibb were commenting and thanking the water authority for no flooding,” Macon-Bibb commissioner and authority member Bill Howell said. “Nowell Estates didn’t have any flooding. It didn’t even fill the ditches.”
In addition to an ill-timed water main break in south Bibb which can happen even without a deluge of rain, the only storm-related issue was a power outage at the Lower Poplar Reclamation Facility. Two downed trees delayed utility repairs and led to a sewage spill of about 100,000 gallons, which Wanna chalked up to Murphy’s Law.
Macon-Bibb commissioner and authority member Valerie Wynn also commended the staff.
“It shows when you’re proactive in getting things done, you don’t have to be reactive,” she said. “So thank you for the good job that you do.”
— Civic Journalism Senior Fellow Liz Fabian covers Macon-Bibb County government entities for The Macon Newsroom and can be reached at [email protected] or478-301-2976.
