LOS ANGELES - San Francisco expects to reduce a proposed sewer fee increase by more than 50% with, savings from today's planned refunding sale of a $321 million sewer bond issue.

The city may save an estimated it; $30 million in debt service costs by taking advantage Of historically low interest rates with the competitively bid sale, according to Peter W. Miller, senior managing consultant of Public Financial Management Inc., the city's financial adviser.

As part of a masssive debt restructuring plan, the tax-exempt sewer revenue bond issue will refinance outstanding senior lien bonds and a portion of junior lien bonds. The majority of the issue is an advance refunding.

Ratepayers, who were facing 20% sewer fee increases until 1996. it could pay 8% per year because of in the debt service savings. An estimated $19 million of the savings will be placed in a new rate stabilization fund.

"This will mean an enormous savings for ratepayers," said Mr. Miller. San Francisco "has a big hump in its debt service, and this will allow the city to chop it off and backload it into, the later years of their current debt structure."

Moody's Investors Service recently raised its ratings on the sewer bonds to A1 from A. It cited San Francisco's time]y sewer rate increases on a strong economic base, which provide more than adequate" debt service coverage. Standard & Poor's Corp. assigned an A-plus rating to the issue, which is secured by sewer fees and is not a direct obligation of the city.

To meet federal and state cleanwater regulations, San Francisco has completed more than 80% of a $1.4 billion court-ordered expansion and upgrading of its sewer system. State and federal grants provided more than 60% of the funding. with the balance paid by revenue bonds.

"In other California municipalities, you are just starting to see the impacts of their sewer programs." Mr. Miller said. "San Francisco is a unique place; [officials] started their program early on and are almost completed.

City officials found a competitive sale attractive due to stable market conditions and the relatively simple structure of the advance refunding, Mr. Miller said. Advance refundings are often complicated and sometimes are a proprietary product of an underwriter who sells the issue on a negotiated basis.

"The bottom line is this is a simple, straightforward structure. There are no bells and whistles." Mr. Miller said.

The issue will be sold as serial bonds maturing from 1993 to 2015, but the firms bidding will be given the option on some serials to create mandatory sinking funds and sell term bonds. AMBAC Indemnity Corp. will provide a surety bond in place of the reserve fund.

The San Francisco sewer system provides sanitary and storm-water services to the city and county of San Francisco and to.several small communities in San Mateo County.

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