What Salt Lake City Public Utilities plans to do with proposed $225M bond

The Salt Lake City Department of Public Utilities has multiple major projects in the pipeline, but it’s also racing to complete two key projects to meet federal requirements.
That’s why the department is seeking up to $225 million in bonds to help repay debts on systemwide water and sewer improvements on tap to be completed by 2027 while using a large chunk to cover other types of water projects.
“This particular bond issue was planned as a part of our long-term planning capital strategy,” Lisa Tarufelli, finance administrator for Salt Lake City Public Utilities, told city leaders in a meeting last week.
The bond request isn’t much of a surprise because it was included in the city’s latest public utilities budget that the Salt Lake City Council approved earlier this year. Thus, the City Council isn’t required to adjust its budget to account for the bond, but it could approve a resolution on Tuesday to allow residents to offer feedback on the bond.
If approved, the hearing would be held next month over the bond’s contents before the department seeks to issue the bond.
However, department officials intend to use the bond funds to primarily help repay costs tied to the ongoing City Creek Water Treatment Plant and wastewater reclamation facility projects.
About $99 million would be used to help repay a $348 million Water Infrastructure Finance and Innovation Act loan the department received on the reclamation facility, according to a city memo to the City Council. Another $100 million would go toward various water utility projects, including a match to the $36.7 million Federal Emergency Management Agency Building Resilient Infrastructure and Communities grant the department received for the new water treatment plant.
The new reclamation plant is expected to be “substantially complete” by July 2026 and fully online a few months after that. The new water treatment plant is projected to be completed by the spring of 2027, according to Salt Lake City Public Utilities deputy director Jason Brown.
Any remaining water funds would be used on “critical” infrastructure projects within the system, according to the memo. The department oversees the city’s water needs, as well as Cottonwood Heights, Holladay, Millcreek and some unincorporated parts of Salt Lake County.
Tarufelli said many of the projects would replace aging infrastructure to improve system resiliency, such as new pump stations and the Cottonwoods Connection pipeline connecting the Big and Little Cottonwood water treatment plants that are in line for future rebuilds.
“These bonds don’t pay for additional staff; this is all project work specifically,” she said, explaining that all the money, outside of repaying debt, would go into designing or constructing outlined projects.
The bond may ultimately be less than $225 million, but that is the maximum that could be allowed. There is also a bond rate cap of 6% per annum. Unlike the $730 million Salt Lake City School District bond that Salt Lake City residents approved earlier this month, Tarufelli pointed out the public utilities bond would be repaid through user fees and other public utilities revenue sources.
It’s the latest of a series of water and sewer revenue bonds issued over nearly two decades to help cover the massive costs associated with infrastructure projects. Past bonds led to scheduled fee hikes in recent years, but it’s unclear if the new bond will do the same.
The city memo notes that the department is still working on a “comprehensive water, sewer and stormwater rate study,” and “this bond and the department’s future anticipated bonds are factored into the rate study.” The study about new rates is expected to be released sometime soon.
Members of the Salt Lake City Council didn’t object to the bond during an update last week, but they suggested the department reach out to residents and inform them of the bond and its needs so customers aren’t caught off guard.
More public utility bonds could be issued in the future, especially with the department’s Big Cottonwood Canyon and Parleys water treatment plants also in need of rebuilds. Those are two of several projects in the pipeline beyond the two major capital projects under construction.
“We have a lot of things that we (have deferred),” Tarufelli said.
Meanwhile, if the City Council votes to approve the resolution on Tuesday, a public hearing on the proposed public utilities bond will be held on Dec. 3.