Total of $225 million in Prop Y bonds approved by MSD Board of Trustees

By Staff Report

The Metropolitan St. Louis Sewer District Board of Trustees approved the sale of $225 million in bonds last week, the first issuance of $945 million in bonds authorized by voters in June.

The bond issue, Proposition Y, was placed on the ballot to provide funding to address sewer overflow issues across the district’s service area.

The MSD was sued in June 2007 by the federal government on behalf of the EPA and the state of Missouri on behalf of the Department of Natural Resources.

The Missouri Coalition for the Environment Foundation later intervened under the citizen suit provisions of the federal Clean Water Act.

In the lawsuit, the United States alleged, among other things, that on at least 7,000 occasions between 2001 and 2005, failures in MSD’s sewer system resulted in overflows of raw sewage into residential homes, yards, public parks, streets and playground areas.

Under a settlement announced last year and finalized in April, MSD will pay an estimated $4.7 billion over 23 years to eliminate illegal overflows of untreated raw sewage, including basement backups and to reduce pollution levels in urban rivers and streams.

Issuing the bonds will cost roughly $754,500, excluding an underwriting discount, according to information provided by MSD, and will be paid “from the proceeds of the Series 2012A Bonds.”

The amount of the competitively bid wastewater system revenue bonds was previously intended to be a $250 million issuance and, another time, a $300 million issuance. The lower amount approved last week was agreed upon due to market conditions, according to Lance LeComb, MSD manager of public information.

In a related matter, the Board of Trustees last month adopted an ordinance selecting 11 firms to comprise an underwriter pool to market the $945 million in bonds authorized by voters in June.

Those firms are: Bank of America Merrill Lynch, Siebert Brandford Shank & Co. LLC, Stern Brothers & Co., Backstrom McCarley Berry & Co. LLC, Stifel Nicolaus Public Finance, Valdes & Moreno, Edward Jones, J.P. Morgan, Wells Fargo Securities, George K. Baum and Morgan Stanley.

“For each individual bond sale, a team of seven firms from these 11 will form the team for the specific bond sale,” stated information provided to the Board of Trustees. “Each of seven firms will meet the district’s MWBE (minority- and women-owned enterprises) goals and will be based on the actual sales volume of each sale.

“Proposals were solicited from 52 firms and 31 firms responded. Of the 31 firms that responded, 10 firms were either minority- or woman-owned.”