TUSTIN : City Sells Bonds for Water System

Money for proposed improvements to the city’s water system will soon be available since the city’s sale of bonds totaling $11.5 million.

The City Council last week picked Shearson Lehman Bros. from among five companies that had submitted bids for the bond sale, according to Finance Director Ron Nault.

Nault said the council accepted Shearson Lehman Bros.’ offer to buy the bonds at an annual interest rate of 5.65%, the lowest of the five bids. The other companies submitting bids were Merryll Lynch, Pierce, Fenner & Smith; Stone & Youngberg; Smith Barney, Harris Upham & Co. and Prudential Securities Inc., he said.

The city spent $295,000 to issue the bonds, Nault said.

The bond certificates will mature over 20 years. The annual debt service, estimated at $1.04 million, will be paid from the city’s water revenues, Nault said.

Last September, the council approved an increase in water rates each year for the next three years, starting in November this year.

Nault said the bond sale will pay for a 10-year, $5.3-million program to improve the water system, including expanding the Main Street water reservoir and renovating the Rollings reservoir.

In addition, $3.8 million will be used to refund the 1983 water bonds, $1.3 million to repay a loan to the Orange County Water District and $1.06 million to create a reserve fund.