Bond Indentures and Ordinances
Apart from local and state laws, the ability to issue bonds proceeds to finance private lead line replacements, GSI, source water protections, efficiency measures, or other distributed water strategies may be impacted by overly narrow interpretations of prior bond indentures and/or bond ordinances. These documents ensure, among other things, that the bond issuer does not take on subsequent debt for activities that could weaken their ability to repay more senior bondholders.
It would be extremely rare to see specific exclusions for distributed infrastructure. But language indicating that any new debt needs to be for “improvements to the water system” may be interpreted to suggest that private property installations may not be allowed since they may not be part of the “water system.”
An easier case can be made for language allowing new debt that “benefits the system,” given the documented benefits provided by distributed infrastructure. Bond indentures are another place to check for the ability to use bond proceeds for distributed systems.
WaterNow has worked through legal authority issues with a number of municipalities and we are available to support your community or answer your questions.
