THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, December 1, 1995 TAG: 9511300154
SECTION: CHESAPEAKE CLIPPER PAGE: 04 EDITION: FINAL
SOURCE: BY FRANCIE LATOUR, STAFF WRITER
LENGTH: Medium: 67 lines
An overwhelming voter mandate last month for $72.5 million in water and sewer improvements may already be bringing returns to Chesapeake customers.
Interim City Manager Clarence V. Cuffee announced to City Council on Tuesday that competitive bids for water and sewer bonds yielded an unusually low interest rate from financial lenders.
Though the city had been estimating a 6-percent rate, officials last week got a rate of 5.44 percent for the bonds from Raymond James and Associates Inc., a St. Petersburg-based underwriter.
The low rates mean the city will pay less to borrow the money, said Finance Department assistant director Dale F. Craver.
``It's just like your own home mortgage,'' Craver said. ``You're going to shop around for the best interest rate, because you'll have it for 30 years. Naturally, you're going to pay a lot less out over the life of that mortgage than you would have otherwise.''
Craver attributed the unexpected results to a combination of favorable market factors and the city's bond rating.
Last week, the rating agencies Standard and Poor's and Moody's confirmed the city's AA bond rating, which is only second to the highest rating possible from those firms.
The high marks came after city representatives, including Cuffee, Public Utilities director Amar Dwarkanath, financial adviser Larry B. Wales and Finance director Joseph A. Sibley presented their bond request to rating agencies in New York.
Just as encouraging to Craver was the fact that eight financial firms sought the right to sell the bonds.
``It means that they have confidence in the city, and have a lot of customers who would want to invest in a place like Chesapeake,'' Craver said.
The highest bid was 5.51 percent, according to Cuffee's memo to council members.
On Dec. 12, the city will actually get the money from underwriters, which will allow them to start construction on a project that has been in the planning and design process since last year.
Voters on Nov. 7 approved the $72.5 million to upgrade the city's water treatment plant system. The improvements will bring the Northwest River Water Treatment Plant in line with federal standards required by the Safe Drinking Water Act.
Localities have until July 1, 1998, to comply with the stricter, sweeping amendments to drinking water laws passed by Congress in 1986.
The bulk of the $72.5 million will pay for an additional filter that will not only squeeze out potentially harmful chemicals identified by the federal government, but also rid the city of high salt problems that have plagued its tap water in past years.
The filter's mesh will be so fine that salt won't be able to get through and will be left as a brine-like concentrate. The city will dump the impurities into the Elizabeth River.
To make up for the three million gallons of water a day lost to the new filtering process, the city will add four new wells: three along Battlefield Boulevard and one inside the Northwest River plant itself.
The bond issue also includes $1.3 million to help build the Lake Gaston pipeline when it comes on line; $5.6 million to expand pumps that draw raw Portsmouth water, allowing an increase from two million to five million gallons per day; and $2 million toward building a one-million-gallon storage tank at Cavalier Industrial Park to improve fire protection in Deep Creek. by CNB