Council Provided Information - 7/9/2024CITY COUNCIL OF SALT LAKE CITY
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COUNCIL STAFF REPORT
CITY COUNCIL of SALT LAKE CITY
TO:City Council Members
FROM:Lehua Weaver
DATE: June 11, 2024
RE:Written Briefing: Public Utilities Revenue Bonds, Series 2024A
Water Infrastructure Improvements – Public and Private Lead Service Lines
ISSUE AT-A-GLANCE
The Department of Public Utilities is proposing to obtain funding through the State in order to
perform private and public lead service line identification and replacement. The funding will be
treated similarly to the issuance of bonds in terms of repayment and debt calculation, however the
State is officially the “purchaser” and a portion of the bonds may be forgiven. The project includes
replacement of lead or galvanized lines for some private customers who would not otherwise be able to
afford the required work.
The bond terms include two favorable components:
1. The total “bonds” issued are for $39,525,000, however $19,350,000 will be treated more
as a grant and forgiven through the State’s Revolving Loan Fund for work performed in
certain census tracts, to ensure affordability of the required replacements.
2. Rather than a conventional interest rate, the State will charge a 1.5% “assessment” – this
lower rate was established to keep costs as low as possible for City water customers. A
higher interest rate could have resulted in a higher increase to water rates to pay the higher
debt service (repayment).
BACKGROUND INFORMATION
•Project information:
o The Federal funds were set aside to assist with meeting regulatory requirements,
specifically with lead service line identification and replacement.
o Water mains may also be replaced as needed.
Item Schedule:
Written Briefing: June 11, 2024
Unfinished Business: July 2, 2024
Public Hearing: August 13, 2024
Page | 2
o According to Public Utilities,
▪“The service line replacement will be prioritized based on: 1) Known lead service
lines or galvanized lines requiring replacement 2) Environmental Justice 3)
Addressing vulnerable populations to lead exposure 4) Sample results and
customer participation.”
▪The location of needed replacements was “obtained from our inventory work,
which includes extensive City Historical records review, home inspections,
sampling and customer surveys and public outreach.”
•Financial info:
o The Bonds are not typical revenue bonds, because of the portion that will be forgiven
and because the State is officially the “purchaser” of the bonds.
o The 1.5% assessment (in lieu of an interest rate) is set based on the State’s cost to
administer the loan.
o The amount of the loan that is “forgivable” will be determined based on the work that
can be performed in certain census tracts.
o The current paperwork indicates that Public Utilities would need to set aside 5% of the
water rate revenue annually, but staff understands from Bond Counsel that this
requirement will be waived. Instead, Public Utilities staff explained that a “debt service
reserve account in the amount of $745,625 will be established in accordance with the
terms of the official paperwork (Section 3.3 of the Twelfth Supplemental Indenture).
Annual deposits of $74.562.50 will be made into the account until the reserve
requirement of $745,625 is met. This account is to be used if insufficient funds are
available in the Bond Service account.
•Schedule: On July 2nd, the Council will consider adopting a “parameters resolution” and set the
date for a required hearing on August 13th.