CHICAGO — The Metropolitan St. Louis Sewer District's public rate commission is backing the district's proposed rate hike plan and $900 million bond issue.
The commission endorsed the plan at a meeting July 30. Voters will weigh in on a referendum expected next year on the borrowing plan that continues the district's long term capital program. The MSD board will begin discussions on a potential referendum date this fall. The borrowing will help keep down the need for higher rate hikes.
The plan would set rates for 2017 to 2020 and provide funding for $1.5 billion in projects over those four years. They are part of a larger, $4.7 billion long-term infrastructure program of capital projects, many required under the 2012 consent decree struck with the U.S. Environmental Protection Agency.
"The financial plan recommends senior lien debt issuance levels designed with the objective to maintain credit rating metrics consistent with strong credit ratings and in consideration of the district's operational and capital funding needs," the proposal says.
The plan relies on borrowing, service charges, grants, and state revolving fund support. If approved, the district doesn't intend to tap the new capacity until fiscal 2018 as borrowing authority remains from a $945 million authorization approved by voters in 2012. The district intends in fiscal 2016 to sell about $150 million of bonds and then $174 million in fiscal 2017.
The proposed plan going forward relies on issuance under the new authority of $216 million in 2018, $235 million in 2019, and $293 million in 2020.
Headed into the next stage of its capital program, MSD is proposing a shift in how its funds stormwater projects, which are separate from its wastewater program. It wants to move to a districtwide 12-cent uniform tax per $100 of a property's assessed value. The funds would pay for $70 million of stormwater projects. The current rate structure sets fees based on location, so if the change is approved rates would go up for some but down for others.
The district has ratings of AA-plus from Fitch, Aa1 from Moody's Investors Service and AAA from Standard & Poor's. All three assign a stable outlook to the credit.