Carson City debt commission approves $18 million sewer bond

An $18 million sewer bond issue headed to market at mid-year won 5-0 approval from Carson City’s Debt Management Commission, and the city retained some $5 million in clearance regarding debt capacity.

Finance Director Nick Providenti told commissioners by the time the issuance will reach market there will be even more clearance thanks to both ascending assessed valuation of property and intervening pay down of debt. Chairman Don Hataway asked a question about the current gap between debt and the capacity lid: “Have we ever bumped up that close to the limit?”

Providenti said not in his time with the city, but explained the moving target was moving in the right direction now.

“This should be the bottom,” he said, talking of 2014 and partly basing that on assessed valuation swooning during the recent recession to rebound only lately. He said, for example, between now and July, about the time the sewer bonds are slated for issuance, $15 million capacity via higher assessed values would ease things. Providenti said assessed value is going up 7 percent.

He also said post-meeting no additional debt issuance is on the horizon after this until 2017, and while capacity July 1 will ascend to $215 million the debt load will decline some $8 million.

John Peterson of JNA Consulting Group, LLC, an independent public finance advisory firm that handles pertinent chores for city government, told the commission bonds will be general obligation debt backed by a pledged revenue stream from sewer and drainage rates. He said he expects a low interest rate of 3 percent or less. Using current figures, he said 15 percent of debt based on $1.33 billion in assessed value is the lid. He said that’s $200 million.

When the debt actually is issued after a 90-day period and subsequent action by the Board of Supervisors, the debt level would be $195,785,000 if no other debt were retired and values didn’t rise, so he determined city government remained in good shape. He said Standard and Poor’s rates Carson City bonds AA-minus and Moody’s rates them A-1, which should remain the case.

In other action, the commission accepted annual reports from the Carson City Visitors Bureau, the V&T railway and another report from the Nevada Department of Taxation. The first two indicated no new debt load was anticipated from those quarters and the latter was the state’s annual local government indebtedness report.