Rainbow MWD repeals Ordinance 95-1
Last updated 11/18/2018 at 5:13pm
The Rainbow Municipal Water District repealed Ordinance 95-1 which requires approval by a public vote for the district to incur additional debt if the existing Rainbow debt is more than $1 million.
A 4-0 Rainbow board vote Oct. 23, with Bill Stewart absent, approved the repeal of the debt restriction.
"The board held a public hearing to repeal the ordinance," said Rainbow general manager Tom Kennedy.
In April 1995 the Rainbow Municipal Water District board approved Ordinance 95-1 which requires approval by a public vote for the district to incur additional debt if the existing Rainbow debt is more than $1 million. Registered voters within the Rainbow Municipal Water District collected sufficient petition signatures to require that the district choose between adopting the requirement for a public vote to incur additional debt or placing the proposal on the ballot. The Rainbow board chose to adopt the ordinance.
Rainbow staff and board members now believe that Ordinance 95-1 handicapped the district's ability to obtain low-cost financing for necessary improvements, and Sept. 18 Rainbow's board voted 5-0 to hold the Oct. 23 hearing on the abolition of Ordinance 95-1. Because Ordinance 95-1 was adopted by board action rather than by a public vote, no public vote was needed to repeal Ordinance 95-1.
"This gives the board the authority to participate in the capital market to finance certain improvements," Kennedy said.
The repeal of Ordinance 95-1 allows Rainbow to finance capital projects rather than pay for the projects at once and incorporate those costs into water rates.
"We took action now because we got some really good interest rates," Kennedy said. "Interest rates are going to be going up, so it's time to act now."
A government agency's debt is often subject to philosophy. Some boards believe that the pay-as-you-go method frees up interest payments for other projects. Another philosophy is that bonding for capital improvement projects translates into future beneficiaries paying their share as opposed to being paid for in full by current residents who leave the area before the project's completion and newer residents not paying at all for the project.
"If we build a new pipeline or something the people who are actually using the pipeline at that time are paying," Kennedy said.