Santa Rosa advances $50m wastewater bond plan for Laguna electrical upgrade

Santa Rosa Utilities Department, California · Meeting date: October 15, 2026 · Published: October 16, 2026

Santa Rosa’s utility board has backed a wastewater revenue-bond issue of up to $55 million, centred on $35 million for the construction phase of electrical-infrastructure replacement at the Laguna Treatment Plant. The transaction would also refund, restructure and partially defease existing bonds in a strategy staff said would produce debt-service savings and preserve flexibility for future financing.

Key points

The Board of Public Utilities unanimously recommended that City Council authorise the Series 2026A wastewater revenue bonds; Board Member Meisler was absent.
The proposed financing targets approximately $50 million, including $35 million for the Laguna Treatment Plant electrical-infrastructure replacement and about $15 million for debt restructuring.
City Council is scheduled to consider the authorization on October 27; the finance team expects to enter the capital market in early November and close in late November.
The requested authorization sets a ceiling of $55 million, a maximum interest rate of 4.5% and an underwriter discount capped at 0.5%.
Staff said repayment assumptions were already incorporated in the wastewater rate package adopted by City Council, with no additional rate impact anticipated.

Full report

Santa Rosa’s Board of Public Utilities has unanimously recommended a wastewater revenue-bond issue to finance construction of electrical-infrastructure replacement works at the Laguna Treatment Plant, coupled with a restructuring of outstanding utility debt.

The board voted on October 15 to recommend that City Council authorize the Wastewater Revenue Bonds, Series 2026A, and associated documents. The proposed transaction is expected to target roughly $50 million, although the requested authorization permits issuance of up to $55 million at an interest rate no greater than 4.5%.

Of the anticipated proceeds, $35 million would fund the construction phase of the Laguna electrical-infrastructure replacement project. The balance would be used to refund or restructure portions of the city’s 2014A and 2016A wastewater revenue bonds and partially defease the 2002B bonds, alongside transaction costs and use of reserve or trust funds from earlier issues.

Santa Rosa Water said the electrical project had been identified several years ago to address the safety and long-term reliability of the treatment plant’s electrical system. The utility has already awarded a design contract to Hazen & Sawyer in 2024 and authorized procurement of key physical components from Rexel in February 2026. Staff told the board the project was at 90% design, with key equipment procured, and that bidding planning was under way.

The utility’s finance adviser said the structure would provide the $35 million of project funding while extending the wastewater system’s debt profile by only one year. Existing wastewater-fund debt of more than $180 million is currently scheduled to retire by 2036. The adviser said the proposed financing would add about $49 million to $50 million of debt but would result in only one further year of debt service.

The financing team’s good-faith estimate assumes borrowing costs of about 4%, with total transaction costs of slightly more than $500,000. The anticipated total payments over the financing term are about $66 million. The City Council authorization would include higher financing parameters to provide market flexibility, including the 4.5% interest-rate limit.

Staff said the debt repayment had already been incorporated into the wastewater rate-setting process. City Council adopted a five-year wastewater rate package containing 5% increases in fixed and usage charges, according to the presentation. The utility said it had originally modelled a 30-year, 5.5% financing that would add about $2.6 million annually in debt service. Under the proposed structure, staff said aggregate debt service would remain level in the first year and no additional rate impact was anticipated for Santa Rosa Water customers or regional partner agencies.

City Council is scheduled to consider the authorization on October 27. Subject to that approval, the team expects to enter the bond market in the first week of November and close the transaction later that month.

This summary was generated by AI based on the source document and may contain errors.

Source: Board of Public Utilities, Santa Rosa Utilities Department