Sedona’s most valuable asset sits southwest of the city on Hwy. 89A, where taxpayers can freely admire $52 million dollars going for waste.
By Susan Johnson
Larson Newspapers
Sedona’s most valuable asset sits southwest of the city on Hwy. 89A, where taxpayers can freely admire $52 million dollars going for waste.
The largest portion of Sedona’s $75 million of long-term debt, 69 percent, is concerned with paying off bonds issued for the construction, expansion and maintenance of the wastewater treatment plant and its pumping stations.
The rest of the city’s debt is in three categories.
An $18-million bond is the next biggest piece of debt and also the newest, floated in October, to fund for four concurrent projects: sewer and drainage in the Chapel area of Sedona off Hwy. 179, drainage in the Harmony and Windsong area, Hwy. 179 road improvements and drainage along Hwy. 179.
Four-million dollars remaining due on the purchase of the
city campus and a special improvement district owing $500,000 for Jordan Park complete the short list of items that add up to almost $75 million.
Interest rates on the debt range from 3.75 percent to 4.5 percent, and are reviewed regularly to possibly refinance at lower rates.
Four of the outstanding bonds now have lower rates than at their initial issuance, saving the city $2.8 million in interest.
The current bonds won’t be completely repaid until 2028.
The city’s ability to repay these debts reflects in how its most recent $18-million bond earned an “A” rating from Standard & Poor’s, a financial services company that rates $34 trillion in debts worldwide.
“Initial construction in 1991 on the wastewater system was the first debt issued by the city,” City Manager Eric Levitt said. “Ten years ago, we secured major financing to add capacity and collection lines in order to satisfy an Arizona Department of Environmental Quality consent decree.”
ADEQ pounced on the city after a 100,000-gallon sewage spill on Hwy. 89A in 1994.
Taking the matter to court, the agency forced the city to finance upgrades to the wastewater plant and make connections for specific homes.
The plant can process 2 million gallons a day, but is only processing about 1.3 million gallons, leaving plenty of room for growth.
In addition, the city has improved its wastewater reserve fund from $1.5 million in 1996, a condition that didn’t meet requirements for a new bond, to $25 million today, an amount sufficient to pay for current maintenance and also enough to meet the city’s obligations in the event of an economic downturn.
In the meantime, the city has no plans to take on significant amounts of additional debt unless residents find improvement projects sufficiently compelling to vote for a general obligation bond.
“As I see it, the city’s residents have three choices,” Levitt said. “We can downsize our capital improvements across the board or we can concentrate on just one project at a time or we can find another revenue source.”
Although Levitt says he sees no downside to any of the choices, he and Assistant City Manager Alison Zelms are opposed to segmenting large projects into small multiple phases due to a lack of funds.
“Phasing can cost more and we try not to do it,” Zelms said. “Doing a big project all at once usually gets a better product with a shorter impact, making neighbors happier with the result.”
