Eastern New Mexico Rural Water Authority board members voted Wednesday to let the Albuquerque securities firm Dain Rauscher do a study of the authority members’ financing capacity, while awaiting the completion of a second, related, study.
Kevin Powers, a vice president of Dain Rauscher’s municipal fixed income division, said company personnel will visit authority members to study outstanding debt, bonding capacity and familiarize them with the various types of bonds they could use to raise money for capital, operating and maintenance costs for the project.
Powers said the company will develop a report of its findings, which it will present at the authority’s next meeting, at 10 a.m. May 26 in Clovis.
The study will cost approximately $55,000, half of which will be paid by the U.S. Bureau of Reclamation, under a funding agreement with the authority, and half of which will be paid by the authority from $2 million it received from the state Water Trust Board on March 3, said the authority’s Program Manager Scott Verhines.
Verhines said a study of authority members’ ability and willingness to pay the cost of the project, undertaken by Dornbusch Associates of Tucson, Ariz., has yet not been completed. He said he sent information from the last two cities who needed to supply it to Dornbusch earlier this week.
The Dornbusch study is budgeted at up to $25,000. So far, the consultant has spent approximately $13,000, Verhines said.
Clovis Mayor David Lansford said the two studies are related, but don’t cover the same information.
“Dornbusch is studying rate structures. Dain Rauscher will look at a variety of things that will help cities cover capital costs, and operation and management,” he said.
“I think it’s a given that the rate structure alone will not cover the cost of the system. Communities are going to have to go out for some bonds. It will be a question of how much you need to borrow and how you can factor that into the rate structure,” he added.
Verhines said the authority has received a letter from Sen. Jeff Bingaman, D-N.M., the ranking Democrat on the Senate’s Energy and Natural Resources Committee.
Bingaman is supporting authorization legislation for the project. In the letter he asked for answers to several questions, including, “Has the Authority adopted a strategy/plan to ensure that the communities receiving water from the project will be able to afford operation, maintenance and replacement costs?”
“Ideally, we’d have both studies done together,” Verhines said. “Their importance is becoming more and more apparent.”
In other business, Verhines said the state Water Trust Board has set nine conditions to its $2 million grant. Among these are: a detailed final cost estimate, including time frame, for all items necessary to complete this project, acceptable to the New Mexico Finance Authority; a draw down schedule of project expenditures; the New Mexico Environment Department and the Interstate Stream Commission will review and approve plans and specifications for the project.
Tom Brandt, a project engineer for the Construction Programs Bureau of the state’s Environment Department, said he would begin working with the project.