City of Davis

Project:
Multi-Jurisdictional
Water Project

Project Highlights

The City of Davis (“City”) has historically used groundwater as its primary domestic water source. In 2008, the City began exploring the option of acquiring surface water from the Sacramento River. Working jointly with the City of Woodland, a plan for a $350 million water treatment plant and distribution system was developed to enable both cities to replace groundwater supplies with better quality surface water.

This project is expected to take a significant amount of time and funding to be completed. The acquisition of the water rights, design, and negotiations alone are expected to last many years. To provide funds for design and engineering that would occur prior to any long-term debt offering, NHA Advisors developed an interim financing strategy that provided the City with funds for design and engineering work that would occur prior to any long-term debt offering. Given the anticipated capital needs and the projected bond requirement, NHA Advisors recommended an interim financing solution that minimized the debt service burden on water rates until such time as the total capital and financing costs could be determined. This interim solution incorporated a $15 million bank line of credit to provide interim funding for design and engineering. The cost of the line of credit included interest and a small annual fee for retention of this line of credit. Actual costs for the credit line, including draws, have been a fraction of what they would have been for a traditional long term fixed rate bond issue. In addition, the City has maintained the flexibility to create rate covenants and other financial considerations as the construction costs are determined and the water revenue bonds will be issued.

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