Waste Water Treatment Facility Expansion Financing (Plum Creek)

CASE STUDY: Castle Pines North Metropolitan District, Colorado

The Goal

Castle Pines North Metropolitan District is located 24 miles south of Denver in Douglas County. They provide service to 3,600 water customers and 3,550 sewer customers in the Castle Pines North and Lagae Ranch developments and adjacent Hidden Pointe Metropolitan District.

In 2018, Castle Pines North Metropolitan District retained Ehlers to advise on its $4.25 million financing need to increase its share of the expansion of the Plum Creek Water Reclamation Authority and Treatment Facility. This included determining the term and method of sale, driving the approval process and managing the overall transaction through financial close.

The Solution

District officials engaged Ehlers to provide financial management planning services. Ehlers met with District staff to present financing options, including sewer rate impact analysis and forward-looking financial analysis. We paid close attention to the District’s rates compared with regional peers, how to mitigate rate increases and how sewer financing would impact ability to issue additional debt.

Given the slim debt service coverage ratios generated from the District’s waste water revenues, Ehlers recommended the District pursue a combined water-sewer revenue pledge. One complicating factor was the District’s outstanding loan from the Colorado Water Conservation Board (CWCB), secured solely by its water revenues. Ehlers negotiated with the CWCB to approve additional debt and also secure water revenues for the proposed sewer financing.

The Results

The District ultimately decided to pursue a direct bank loan as it needed to close the transaction before fiscal year end 2018. Ehlers crafted a RFP for distribution to banks, evaluated bids received and gave bid recommendations given the District’s needs. Ehlers also managed the financial close process, ensuring the District received funds prior to year’s end.