LINCOLN -- Lincoln City Council, in a special meeting last week, authorized the city to purchase a new $3.7-million water storage tank and issue $4.5 million in bonds to finance the project.
The council accepted a low bid of $3,787,000 from Landmark Structures Inc., of Fort Worth, Texas, for an elevated tank that will hold 2 million gallons of water. The city contracted with Crist Engineers Inc., of Little Rock to design the tank to improve the water's distribution system.
The tank will be installed on two acres on the east side of North Jackson Highway. The city purchased the land from Thomas Lee and Gloria Jean Hunton for $50,000.
Mayor Doug Hutchens opened the meeting with a public hearing on the city's proposal to issue bonds for the water tank project. No one spoke or asked any questions during the public hearing.
The council passed the ordinance to authorize water and sewer revenue bonds in three readings and then voted to approve an emergency clause so the ordinance would become effective immediately.
All council members were present at the special meeting.
Ryan Bowman with Friday, Eldredge and Clark law firm in Little Rock, told council members the city is issuing $4,555,000 in bonds for an issue that will expire in 24 years, on Nov. 1, 2043. The city will pay interest rates on the bonds ranging from 3 percent to 3.87 percent over the life of the bond issue.
Payments will be due on May 1 and Nov. 1 of each year, with the first payment due Nov. 1. Citizens Bank and Trust in Van Buren will serve as bond trustee.
Bowman said Citizens will create a construction fund for the project. As invoices come in on the project, the city will submit requisition forms signed by two people to Citizens to pay the third party.
"You direct the investment of the funds," Bowman said.
In addition to a construction fund, the city also is required to have a depreciation fund, operations and maintenance fund and a debt serve reserve fund. The reserve fund is considered a "rainy day" account in case the city needs the money to make a bond payment, Bowman said. Any money taken out of the reserve fund will have to be reimbursed.
Kevin Faught with Stephens Inc., of Fayetteville said Lincoln's average bond payments per year will total about $280,000. The city will make a principal payment annually and two interest payments per year.
Faught said Lincoln's bond issue had a "good reception from the investment community." Stephens sold the bonds March 12, the day before the council's special meeting.
Hutchens noted the city has been discussing the water storage tank project for more than a year. On Jan. 15, 2018, Lincoln City Council met to hear presentations from firms interested in serving as the engineering firm for the project.
Lincoln selected Crist Engineering. The next steps were to get an option to purchase land and then determine if the land was suitable for a water storage tank. A geotechnical study of the land showed it was suitable. Crist Engineering then moved forward to seek bids on the project.
The new water storage tank will have an 80-foot-tall concrete pedestal that is 54 feet in diameter. The steel tank will be 98 feet in diameter. As part of the project, the construction company will have to bore under Jackson Highway to install water lines to the tank.
Revenue from a rate increase will be used to pay off the bond debt. The City Council in January amended the Lincoln Municipal Code to increase the basic water rate for all groups by $13.50 for the first 1,000 gallons. Rates on subsequent gallons is remaining the same.
It is estimated that a $13.50 rate increase would bring in $379,000 per year, based on information from the past two years about water volume used and revenue generated.
General News on 03/20/2019