Vallejo issues bonds that will fund $51.27 million in drinking water system improvement projects

Feb. 28—On Wednesday the City of Vallejo took a step forward to improve the drinking water pipes, pumps, treatment plants, and water meters of the drinking water system by issuing its Series 2021A Water Revenue Bonds. The bonds will fund $51.27 million in drinking water system improvement projects, according to a news release from the city.

A bond is similar to an IOU but regulated by the government. Investors "buy" bonds from cities, which, like an IOU, is a promise that the city will pay the money back with interest over a certain amount of time.

"The Series 2021A Water Revenue Bonds will fund $51.27 million in repairs and upgrades to the Vallejo drinking water system such as pipe repair and replacement, the purchase, and installation of upgraded pumps for better water delivery, and upgrades to the various water treatment plants and storage reservoirs in our drinking water system and upgrading water meters and meter reading technology," said Mike Malone, Vallejo's Water Department Director.

Over the course of the 2018-2019 rate-setting process, council, Vallejo city staff and the community identified infrastructure and maintenance work to Vallejo's water system as a top priority.

The bond-funded projects will:

—Support the reliability of the drinking water system;

—Help to make water operations more efficient;

—Guarantee that Vallejo's drinking water continues to meet (or exceed) all water quality requirements set forth by State and Federal authorities.

There will also be infrastructure improvements to support consistent drinking water delivery to all customers during the annual PG&E Public Safety Power Shutoffs (PSPS).

Some of the important projects that these bonds will fund are:

—Advanced metering infrastructure (AMI);

—Replacement of aging pipelines;

—Improvements to water treatment plant and pump stations;

—Replacement of drinking-water storage tanks.

Due to the current market the city secured an effective interest rate of 2.50%. The bonds were rated A+ by the credit agency Standard and Poor (S&P). Vallejo planned ahead for the repayment of these bonds ("IOUs") in Vallejo's current rate plan, which council unanimously adopted in September 2019.

A portion of the 2021 Bonds also carries insurance from Build America Mutual Assurance Company (BAM). BAM has designated the Bonds as GreenStar Bonds. You can learn more about GreenStar Bonds HERE.

To learn more about government bonds, visit www.investor.gov

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