St. Louis sewer district wants bond vote delayed because of COVID-19
The Metropolitan St. Louis Sewer District will go to court in an effort to postpone a $500 million bond referendum because of the COVID-19 outbreak.
MSD staff recommended delaying the vote, which is scheduled for April 7.
The agency’s board of trustees approved an ordinance at its meeting Monday night that authorizes its secretary-treasurer to take necessary measures to ensure that local election boards do not count the proposition votes.
MSD will need to seek approval from the circuit court judges in the city of St. Louis and St. Louis County, according to a MSD statement.
"Due to the current state of the COVID-19 pandemic, it will be difficult if not impossible for many of the District voters to be informed, participate and vote in the April 7, 2020 election,” the ordinance says.
Proposition Y would authorize $500 million of borrowing to help fund $1.58 billion of MSD projects between 2020 and 2024 while limiting rate hikes.
A simple majority is required for the bond authorization to pass.
“Several factors were weighed in the Board of Trustees’ decision, including public concern about the COVID-19 pandemic, warnings from public health officials to avoid large groups, and emergency declarations in every jurisdiction that covers MSD’s service area,” the statement said.
Adding to the list of factors is whether the election will go on as planned. St. Louis County leaders want to delay the April 7 election while the election remains scheduled for April 7 in the city of St. Louis so “there is uncertainty about the date itself,” MSD said. “Postponing the election will have no impact on wastewater rates in 2020 or 2021.”
Local courts have so far rejected the St. Louis County Election Board’s efforts to postpone the election, so the matter is likely headed to the Missouri Supreme Court unless the board drops the effort.
April 7 is Missouri's general municipal election day.
MSD is working under a 28-year, $5 billion consent agreement with the U.S. Environmental Protection Agency. It bills the program as "Project Clear."
MSD last came to market in the fall. The district’s bonds are rated AAA by S&P Global Ratings and AA-plus by Fitch Ratings. Both assign a stable outlook.
The deal marked the district’s first since 2017 and additional borrowing of about $150 million is expected this year as it continues to chip away at the mandates in the 2012 agreement with federal authorities to reduce sanitary sewer overflows and building backups.
In 2018, a federal judge signed off on an amendment that extended to 28 years the original 23-year term of the agreement.
“The extension should allow the district to better manage costs and therefore help to temper year-over-year rate increases,” Fitch said in its new report.
The district last went to voters in 2016 when $900 million in borrowing capacity was approved. The referendum process allows voters a say in the level of rate increases needed to support the program.
“The continued support of voters for additional debt and rate increases tied to the carrying cost of the debt are key to maintaining the district's rating. Additionally, any expansion of the capital improvement and replacement program requiring more debt will likely pressure the rating,” Fitch said.
The district, which has $1.3 billion of outstanding debt, provides wastewater treatment and storm-water management to 1.3 million residents.