Mishawaka approves $38m waterworks bond authority for treatment and network upgrades

Mishawaka approves $38m waterworks bond authority for treatment and network upgradesThe Mishawaka Common Council approved authority for up to $38 million in waterworks revenue bonds to renew treatment, pumping, wellfield and distribution assets. The utility intends to pursue a bank placement rather than a public bond sale, citing rate certainty and lower issuance costs.

Council approved Ordinance 2026-34 by a 6-0 vote, with one councillor recusing himself.

The ordinance authorises up to $38 million in waterworks revenue bonds or bond anticipation notes; it does not require the full amount to be issued at once.

Planned works include gravity-filter and high-service-pump replacement at Virgil Water Treatment Plant, Division plant reliability upgrades, new mains, wellfield and booster-station upgrades, and water-division equipment and technology replacements.

A bank has offered to purchase the full issuance at 4.95%, with the rate held through 30 October and a seven-year call provision.

The debt will be payable from net waterworks revenues, on parity with the city's 2018 and 2021 waterworks bonds, rather than from property taxes.

Mishawaka Common Council has approved an ordinance authorising up to $38 million in waterworks revenue bonds for a package of drinking-water treatment, pumping, distribution and wellfield improvements. Ordinance 2026-34 passed on 5 October by a 6-0 vote, with one councillor recusing himself because of a professional conflict. The financing authority covers one or more bond series and, if needed, bond anticipation notes. Utility officials stressed that the $38 million is a maximum authorisation rather than a requirement to issue the entire amount immediately. The capital programme includes replacement of gravity filters, high-service pumps and chemical-feed equipment, plus wellfield, building and site improvements at the Virgil Water Treatment Plant. It also covers new water mains, reliability improvements at the Division Water Treatment Plant, demolition of an unused storage tank, booster-station works and broader equipment and technology upgrades across the Mishawaka Utilities Water Division system. A utility representative told the council that the projects were necessary investments in system reliability, capacity, safety and long-term sustainability, rather than optional or cosmetic works. Delaying replacements could increase construction and maintenance costs and heighten the risk of equipment failure or service disruption, the representative said. The city is preparing to use a direct bank placement rather than a competitive or conventional negotiated public sale. Its municipal adviser said an unspecified bank, working alongside underwriter Baird, had offered to purchase the full $38 million at 4.95%, subject to closing by 30 October. The adviser said a competitive sale priced at the time of the meeting was estimated at about 5.1%-5.2%. The proposed placement also carries a seven-year call feature, compared with what the adviser described as a typical 10-year call for competitive or negotiated bonds. Officials estimated that the bank-placement route would save about $380,000 compared with a competitive sale and about $85,000 compared with a traditional negotiated sale, largely through lower placement and transaction costs and by avoiding a bond-rating process. The bonds may mature no later than 25 years after issuance and carry a maximum permitted interest rate of 6%. They will be special revenue obligations backed by net waterworks revenues, not general-obligation debt backed by property taxes. The new bonds will rank on parity with Mishawaka's outstanding 2018 and 2021 waterworks revenue bonds. The adviser said the planned financing had been run through the utility's rate-plan models, retaining a $6 million minimum improvement-fund balance and producing debt-service coverage of around 141% at maximum debt service.