Investors have shown considerable interest in making sure DeKalb County residents don’t have to boil their water.
The county found more than enough buyers for the $381 million of water-sewer bonds it sold Monday, earning a nearly $30 million premium on the deal. After fees, the county will soon have more than $405 million of investor money to start the $1.35 billion overhaul of its aging, and failing, system next year.
“We think we have a very favorable outcome,” county Finance Director Joel Gottlieb told commissioners, who approved finalizing the sale Tuesday.
The sale is something of a turnaround for DeKalb, which saw its bond ratings plummet after ending last year with just $12 million in reserve, less than a third of the $40 million that cover’s a month’s expenses.
Standard & Poor’s Financial Services and Moody’s Investor Services have since upgraded DeKalb's bond ratings, with S&P’s decision released late last month. Higher ratings make it easier for municipalities to borrow money and at lower interest rates.
The county will pay 4.6 percent interest on the bonds sold Monday, just slightly higher than the 4.58 percent it paid in its 2006 sale of water and sewer bonds. With interest, that means DeKalb water utility users will pay back $767 million over the next 30 years.
The county raised water rates 16 percent this year and programmed 11 percent hikes for each year from 2012 to 2014 to raise enough money to pay for the overhaul ordered by the federal government.
Commissioners agreed that the county had locked in a good interest rate but still had questions about the deal. Commissioner Jeff Rader took the hardest stance, asking about fees paid to investment bankers on the deal and the decision not to borrow in January to allow more time for marketing.
“We are trying to get as much information as possible to make certain that the decisions we are making will get us the best deal possible,” Rader said.
Market uncertainty prompted the need to borrow now, Gottlieb said. It also means the county can begin some of the needed work, such as hiring engineers and finalizing designs, by year’s end.
The actual surveying and installation of new sewer and water lines will begin later next year.
Under the consent decree signed with the federal Environmental Protection Agency, DeKalb has eight years to finish its $700 million fix to the sewer system once a federal judge signs off on the deal.
An additional $600 million will go toward cleaning up the South River and other waterways damaged by sewer spills.
No judge has yet acted on the decree, but many residents are eager to see work begin anyway because of both the ongoing spills and potential for jobs to make the repairs .
DeKalb reported more than 830 raw sewer spills between 2005 and 2010 and had an additional 151 in the first nine months of this year.
Fixing the aging system to put an end to those spills could create more than 3,000 jobs in the next seven years, according to a recent study by the University of Georgia's Carl Vinson Institute of Government.
“This can be a stimulus program for DeKalb County small businesses and residents if we do this right,” Commissioner Lee May said. “But we have got a lot to be done.”
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