The Sewerage Agency of Southern Marin (SASM) has announced the sale of $38 million in sewer revenue bonds through a competitive bidding process, after the bond issuance was granted an AA positive rating by Standard & Poor's Rating Service. The SASM Board approved a bond issue in the fall of this year to facilitate critical upgrades and improvements to the SASM wastewater treatment plant located in Mill Valley.
SASM is a Joint Powers Agency formed in 1979 to consolidate the wastewater collection, treatment, water reclamation and disposal needs of about 28,000 residents in Southern Marin County. SASM is made up of six member agencies: the City of Mill Valley, Tamalpais Community Services District, Almonte Sanitary District, Alto Sanitary District, Homestead Valley Sanitary District and Richardson Bay Sanitary District.
As outlined in the SASM Facilities Master Plan, the planned upgrades will update the plant’s aging infrastructure, protect it from flooding, prepare for its future needs, and incorporate sustainability initiatives. The Master Plan calls for more than $30 million in capital improvement projects (CIPs) over the next five years, and another $30 million in CIPs over the 25 years after that at the wastewater treatment plant.
Planned projects will include rehabilitation of treatment and conveyance facilities and electrical system upgrades, odor control, frontage landscaping, and overhaul of the critical treatment equipment and facilities. Without the proposed improvements, SASM will not be able to continue to properly and safely collect and treat its sewage.
"The Wastewater Treatment Plant has served the needs of the community for 33 years, but it is clear to us that the plant’s facilities have surpassed their useful life," Board President Lew Kious said. "Today’s bond sale will allow us to make much needed improvements to be in a better position to provide wastewater services to our community and protect the environment going forward.”
A revenue bond is a municipal bond supported by the revenue from a specified revenue-generating entity. Standard & Poor's granted the bonds with an AA positive, indicating that SASM has a strong capacity to meet its financial commitments. The AA positive rating means the SASM can attain a lower interest rate resulting in lower annual debt service payments and a premium of $1.8 million on the sale of the bond providing SASM with $39.8 million with a repayment of $38 million in principle.
The bond will be purchased by Piper Jaffrey and Company who offered a net interest rate of 3.05% for the 30-year bond along with the $1.8 million bond issuance premium,.
The bonds are set to be paid back with wastewater ratepayer revenues over a period of 30 years. Along with the payments for the bond sale, SASM will have an annual debt service payment of $2,120,000 per year from 2022 to 2042, then dropping to approximately $1,875,000 from 2043 to 2046.