The New Orleans City Council has given the go-ahead for the Sewerage & Water Board to issue as much as $315 million in bonds whose proceeds will be used to fund various capital projects and to refund existing water and sewerage bonds.
The council voted 7-0 Thursday to grant the water board’s request to sell up to $115 million in water revenue bonds and up to $200 million in sewerage service revenue bonds.
The water revenue bonds will be used to improve and expand water treatment plants, among other things. The sewerage service bonds will be dedicated to upgrading the city’s sewerage system.
The bond sale also calls for refinancing outstanding bonds, improving the agency’s bond rating and updating current bond covenants.
The bond sale is part of a strategy the water board intends to employ to leverage the increased revenue it is generating from higher rates that were enacted to support bonds to pay for infrastructure improvements.
The board’s staff has placed the cost of all needed repairs to the system’s old and failure-prone water and sewer pipes, power and water treatment plants, drainage canals and other facilities at approximately $3.5 billion.
The board is expected to generate an additional $583 million through a rate increase the council approved in 2012 that will hike customers’ bills by 10 percent each year through 2020.
The 30-year bonds will pay a maximum interest rate of 7.5 percent.
The Board of Liquidation, City Debt, approved the terms of the bond sales at a meeting late last month. The State Bond Commission will need to approve the bond sales before they take place.