From the Longmont Times-Call (Karen Antonucci):
Faced with three different financing mechanisms for Longmont’s $47 million portion of the Windy Gap Firming Project, the council chose to gather more information from the public first.
Longmont public works and natural resources staff told the council on Tuesday that they have three options to finance the $47 million — completely through rate increases, through rate increases and by issuing $6 million in debt or by issuing $16.7 million in debt.
The decision directly affects Longmont residents’ wallets. Essentially, paying cash up front with rate increases means steep rate jumps in the next two years but is cheaper in the long term.
If the council chooses eventually to finance it completely through cash, water rates will need to jump 21 percent in 2017 and 22 percent in 2018, including 9 percent increases already approved.
Debt, on the other hand, would cause milder rate increases for more years, and cost the city more long term.
On the other end of the extreme, council could choose to ask the voters to issue $16.7 million in debt for the project, which would mean delaying adding an additional increase to rates until 2018. In 2018, they would need to be raised 14 percent and another 14 percent in 2019, then between 5 and 7 percent each in years between 2020 through 2026.
With a projected 4.25 interest rate, a $16.7 million bond would cost an additional $8.4 million in interest, for a total of $25.1 million over 20 years.
In the middle of the two extremes is an option of a mix of cash and debt. The City Council could vote to issue up to $6 million in debt to finance Windy Gap without a vote of the general public. This would cause water rates to jump 17 percent each in 2017 and 2018, by zero percent in 2019 and between 4 and 7 percent each in years between 2020 to 2027.
Dale Rademacher, general manager of public works and natural resources, told the council that staff has timed it out so that the city wouldn’t lose any of the options by commissioning a survey of residents on the Windy Gap financing issue…
The council opted to commission a statistically valid survey be sent to 3,000 randomly chosen Longmont households explaining the three options.