MVWD Takes Next Step In Restructuring Bond Debt For Big Savings

By VERNON ROBISON

Moapa Valley Progress

Members of the Moapa Valley Water District (MVWD) Board of Trustees voted unanimously to take the next steps in an ongoing process to restructure a large portion of the District’s debt in an item heard at a meeting held on Thursday, August 17.

The subject of discussion was two MVWD bond issues: the first issued in 1995, and the second in 2010. The remaining principal left to pay on the two bonds totals nearly $2.7 million. But at the bonds’ current rates, the total paid in interest through the maturity date would total more than $1.8 million. The 1995 bond was issued at an interest rate of 5.125 percent while the 2010 bond is at 4.25 percent.

In July, board members gave MVWD staff the go-ahead to file a pre-application with the Nevada Division of Environmental Protection (NDEP) Drinking Water State Revolving Fund. With that fund, the two bonds in question could be consolidated under a much lower interest rate at 2.26 percent.
This restructuring is expected to take 12 years off of the term of the loan and save the district more than $1.2 million.

MVWD General Manager Joe Davis explained that he had subsequently filed the pre-application document in order to put the district on a priority list for the state funding.
He also said that the district had sought the assistance of financial advisor Andrew Artusa of Zion Public Finance, and retained Kendra Follett from Sherman & Howard, LLC as bond counsel for the process.

The next step was the matter before the board, Davis said. The agenda item was to approve a resolution to submit the proposal to the Clark County Debt Management Commission for its review and approval. After that approval, the district would be required to post public notices over the next 60 days to advise the public on the proposal. Then it would go to the NDEP for final funding, assuming the funds are available.
Davis said that he was shooting for completion of the project in a timeframe of around the first week of December.
The resolution was approved by the board with very little discussion.

In another agenda item, the board listened to a presentation from Joe Phillips of Sunrise Engineering regarding recommendations for capital improvement projects for the MVWD distribution system.
Last year, the MVWD board hired Sunrise to assist in developing a Master Capital Improvement Plan. This process did an in-depth analysis of the MVWD system, determining strengths and weaknesses and recommending where capital improvement projects were be needed. The final version of that plan was presented by Phillips earlier this year.

The study found that the MVWD system had some critical problem areas that needed to be addressed. The cost of completing all of the projects was somewhat overwhelming to many of the trustees at that time. So the trustees requested that MVWD staff work with Phillips to make a prioritized list of projects that would bring the most benefit for the cost. That was the report Phillips brought before the board last week.
“We looked at all of the recommended improvements and ran them through our model,” Phillips said. “We boiled them down to about a dozen projects that would be best options to improve the system.”

From those results, the process was further narrowed down to three top recommendations, he explained.
Davis said that one of his top priorities had been to provide redundancy to areas on both sides of the river in the lower valley. He explained that about 80 percent of the population of the area is located on the west side of the river. But most of the functional water storage is on the east side at the east Logandale tank above the fairgrounds area. This causes supply problems when there is a system failure on the west side, Davis said.

“A few months ago we had a main line break at OLSHACS (Old Logandale School),” Davis said. “Because there is this redundancy problem it brought down service to everyone south of that who was west of the river. Everyone along the Boulevard was out of water until we got it fixed.”
Because of this, two of the high priority projects were to install higher capacity lines crossing the river. The first proposed project would install a 12” line across the Yamashita Bridge. The second project was to upgrade a 3” line currently in place at the Gubler bridge to make it a 12” line.

Phillips explained that these projects taken together would bring dramatically improved pressure to a large swath of neighborhoods all along the west side of the valley. Meanwhile it would have a minimal negative affect to service on the east side, he said.

This project would not be enough to fix all of the district’s problems with meeting fireflow requirements in the lower valley, Phillips said. Though it would bring a few areas into compliance which are not currently. But it’s major benefit would be in solving a big redundancy issue in the system.

The third high priority project on the list was at the northeast corner of Warm Springs Rd, continuing down Sim Rd and servicing the Saltbrush Lane/Greasewood neighborhood. This project would also bring significant improvements in pressure levels to the Lytle Ranch area.

Davis said that he was surprised to see in the model, how dramatic of an effect this project would have. He explained that another of the twelve finalists had been increasing the pipe size along Isola Lane in Moapa to a 12 inch line. But the model had showed much less of an effect in this project.
“It turned out that it was not a huge bang for the buck,” Phillips said.

There were other projects, previously considered high priorities by district staff, which turned out to be less exciting when run through the engineering model. A series of proposed projects feeding the far western portion of the lower valley from the Logandale tank turned out to bring only incremental improvements. These included line improvements coming down directly from the Logandale Tank above Tank Road, a stretch of Rice Rd. to Capalappa, and an upgrade in the area of Lyman and Swapp.
“With some of these, we were originally thinking about the Little Moapa project (a now defunct proposed development which would have straddled the railroad tracks at the far west end of Navajo Ave in Logandale),” Davis said. “The developer was talking about doing that to meet their fireflows in the area. But as is, it is really not worth the cost.”

Other projects that proved to have a lower cost benefit ratio included pipe improvements at Whitmore Rd in Overton, a small stretch of Pat Ave. on the east bench, a segment of Moapa Valley Blvd from Whitmore to Andersen, and a portion of Ryan Ave. in Overton. Each of these were placed lower on the priority list because the benefits were limited.

With the report concluded, board members began to discuss next steps.
“I think we are moving in the right direction,” said board member Ryan Wheeler. “Of course, what we don’t know is what the costs are. So I think we need internal staff to drill down a little bit and give an estimate of what the costs are going to be on these projects. Then we can see how it will impact our budget and open up the question about rate adjustments to fund them.”

Wheeler said this process was an improvement on how capital projects had been handled by the district in the past. “We have always had projects that needed to be done put onto a ten year outlay,” Wheeler said. “Then when it got to the point where it was time to do them, the lack of a budget for them just kicked it further down the road. This approach is to look ahead at what is needed and then start looking at how we can fund them well in advance. If that means swallowing the pill of increased rates or issuing a bond, then that is a board decision.”

Davis said that narrowing the list down to three priority projects would bring a number of benefits. First it would allow staff to focus efforts on the most effective projects.
“If the board finds these three projects worthwhile, then we can go out and walk the projects and focus on nailing down some hard numbers,” Davis said.

Furthermore, those projects could be placed on a list for possible state funding in matching grants or other sources that would help reduce the cost to the district. These would be placed on the priority list alongside much larger and longer-term projects such as drilling a new well at Arrow Canyon or constructing a new storage tank in Moapa. Combining the pipeline improvement projects with these larger proposals might allow for a larger package of funding, Davis said.

Board members instructed Davis to move forward with Phillips on cost estimates for the three priority projects and then report back the findings.