CHICAGO — Kansas City, Mo., voters overwhelmingly approved a $500 million sewer bond referendum that will allow the city to keep rate hikes in check as it completes projects under a $2.5 billion federal consent decree.

The city plans to exhaust its previous sewer bonding authority in a deal this fall that may also tap the new authorization. It also is eyeing an airport refunding.

The borrowing, along with a half-cent sales tax increase, easily won approval with at least 80% of voters endorsing the bonding and more than 60% supporting the tax question in the Tuesday election.

 “We get to establish our street maintenance fund and actually get some work done on streets, rebuilding and repaving, and we get to dedicate some more money to our parks department, so they can maintain our parks better, operate our community centers better and move forward in a positive way,” Kansas City Mayor Sly James said in a radio interview Tuesday.

Sewer rates will still increase annually by about 15% to fund required projects over the next 25 years under the 2010 consent decree, but the hike is far less than the 25% that would have been needed if the bonding had not been approved.

The $500 million of new authority would finance projects over the next decade. The city would then need to return to voters for additional borrowing capacity. Kansas City has exhausted all but $42 million of a previously approved $500 million sewer bond referendum.

The city has $104 million of remaining water bonding authority under a separate $500 million authorization. It would tap half next January or February and the remainder the following year.

The city will exhaust its sewer capacity in a deal this fall. Underwriters have not yet been chosen. First Southwest Co. and Moody Reid Inc. advise on sewer issues.

The current underwriting pool for sewer issues was approved in 2010 and includes 21 firms. The city would draw from it for the fall deal and future issues, said Treasurer Tammy Queen.

Officials are reviewing current funding needs and with approval of the new borrowing capacity in hand, the size of the fall deal will likely grow. The timing of future sales is not yet set. “It will depend on what kind of rate increases the council has an appetite for and the timing of projects that need to be done,” Queen said.

Kansas City and federal authorities in 2010 signed the consent decree requiring upgrades to the city’s sewer system to eliminate overflows of raw sewage and to reduce pollution released in storm water.

Ahead of a sewer sale last fall, Moody’s Investors Service and Standard & Poor’s affirmed the system’s double-A level ratings. They are not rated by Fitch Ratings.

Moody’s said the rating is supported by the system’s large service area, which covers the vast majority of the Kansas City metro area; a stable regional economy; debt service coverage levels that have improved following consecutive rate increases; adequate net working capital; and moderate debt levels that are expected to rise as the system implements the decree mandated by the Environmental Protection Agency.

The sales tax increase is expected to generate about $30 million annually. The revenue will replace funds being lost from expiring taxes, as well as also free up for infrastructure $13.5 million in general fund money that currently goes to fund parks. Parks and community centers will receive an additional $3 million in funding annually under the shift. “It allows the city to spend more for infrastructure without raising property taxes,” Queen said.

James and the council settled on the bonding and sale tax plan last spring over one that sought more general obligation borrowing capacity. The GO plan would have raised property taxes and faced business opposition.

The city is also working on an airport refunding of up to $200 million this fall. The deal would refund 2011 passenger facility bonds and 2003 general airport revenue bonds, Queen said.

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