Water Bonds 2005 Frequently Asked Questions

Update: On May 17th, the Bond package was approved by Tucson's voters.

Since February, Tucson Water staff members have been out in our community, discussing the 2005 Water Bonds with community groups, neighborhood and homeowner associations, service organizations, and other customers. To assist those who have not been able to attend a Bond presentation, we've collected some of the most commonly asked questions and published them here. If you have a question that isn't answered here, please feel free to send it to us using any of the methods available on our "Contact Us" page, or call our Public Information Office at 791-4331.

What are Water Bonds and how do they work?
Bonds can be thought of as similar to a home mortgage. Instead of paying for projects up front, Tucson Water sells bonds to generate the required cash and then repays them with interest over future years. Because repayment of the debt occurs over time, typically 20 years, using bonds to finance projects impacts water rates less than funding projects directly from water revenues. It also means that people who move here in the future and benefit from these projects will participate in paying off the debt incurred to build them.
What will the Bonds pay for?
If approved, the 2005 Water Bonds would be used to continue building facilities that will enable Tucson Water to use more of our allotment of Colorado River water, expand the Reclaimed Water system, and make improvements to our drinking water system. The total amount of the bonds is $142 million. More information is available elsewhere on our web site, or by calling Tucson Water at 791-4331.
How are Bond projects selected?
Each year, Tucson Water, along with its Citizens Water Advisory Committee, the 15-member volunteer group of Tucson Water customers that advises Tucson's Mayor and Council on issues related to water, determines the projects that will be needed over the following 5 years in order to assure that we can continue to deliver safe and adequate supplies of water to all of our customers. These projects include improvements or replacement of existing water system facilities and construction of new facilities. Once the projects have been determined, a financial analysis is done to determine how best to fund the projects. Some of these projects are paid for with on-going revenues, and some are paid for with proceeds from the sale of water bonds. All of this information then goes to Tucson's Mayor and Council for review and approval.
Do bonds pay for maintenance of the system?
No. Proceeds from the sale of Water Bonds are restricted to paying for Capital projects - those facilities and items that have a long life span. Water Bond funding cannot be used to pay operational or maintenance costs, which Tucson Water pays for from water sales revenues or specific fees.
Can I purchase Water Bonds as an investment?
Yes. Water Bonds, like many municipal or utility bonds, are typically sold through brokerage houses in units of $5,000. When bonds are sold, the City's financial experts seek the best (lowest) interest rates, in order to reduce the cost to our customers of paying off the bonds. Tucson Water Revenue Bonds are typically highly-rated by national bond rating agencies such as Standard and Poor's and Moody's. This results in lower interest rates, as the investment is seen as less of a risk to the investor. Your broker or financial advisor can assist you in finding out how to invest in Tucson Water Revenue Bonds.
I live outside the City of Tucson, but am a Tucson Water customer. Can I vote in the Bond Election?
No. Because Tucson Water is a department of the City of Tucson, under current State law, only the citizens of Tucson can vote in the Bond election. However, as noted above, the process of determining which projects are included in the Bond package is conducted with the input of the Citizen's Water Advisory Committee, a 15-member volunteer group of Tucson Water customers that advises Tucson's Mayor and Council on issues related to water. More than one-half of the members live outside the City limits, and take very seriously their task of representing those customers who don't directly vote for Mayor and Council or in Water Bond elections. The group meets on the 1st Wednesday of each month, at 7AM. The meetings are held at the Tucson Water headquarters downtown at 310 West Alameda, and are open to the public.
What happens if the Bonds aren't approved by voters?
In voting conducted on May 17th, Tucson residents approved the Bond package.
The projects included in the Bond package are important to our community. These projects allow Tucson Water to move forward with increasing our use of renewable resources like Colorado River water and Reclaimed water, and will improve and expand our drinking water system. Paying for projects through Water Revenue Bonds is only one alternative method of funding them. If the Bonds aren't approved, the most critical of these projects will move forward, and be paid for through another means, such as general water rates and/or fees. Other projects may be delayed until adequate funding is available.
Didn't we OK a bond package just a few years ago?
Yes, Tucson voters passed a $124 million Bond package in 2000. Those funds were used to build our Clearwater facilities in Avra Valley where Colorado River water is recharged into the ground, blends naturally with the groundwater and is then recovered and delivered to our customers. The Bonds also paid to extend our Reclaimed Water system to reach additional schools, parks and golf courses and funded necessary improvements to our drinking water system. By the end of this summer, the bond proceeds from the 2000 voter approved package will be completely expended or committed to projects already in progress.