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Mason PUD News

Mason PUD 3 Sells Bonds for Capital Projects and Refinancing of Debt

Will be used for new operations center and projects for electrical reliability

Mason County PUD No. 3 today sold bonds to pay for construction of its Johns Prairie operations center, a number of important electrical system improvements and refinancing of a portion of existing debt at lower interest rates.

Proceeds from the par value of the $59.8 million bond sale will fund the following PUD 3 projects:

$34.5 million for the Johns Prairie operations center, including construction, design, equipment, permits and fees
$8.4 million for capital projects, including Mason substation rebuild; construction of a watermain to serve the Johns Prairie operations center; potential relocation of PUD facilities related to the 1.5 mile Belfair SR 3 improvement project; and matching funds, if successful, for a federal stimulus grant for broadband expansion
$9.5 million for refunding higher interest bonds and debt payoff
$7.3 million for reserve accounts, capitalized interest costs and bond issuance fees

PUD 3 had initially expected to sell nearly $70 million on bonds for this investment, but financial staff was able to prioritize investments in capital projects and financing costs to reduce the overall borrowing needs.

Because of the timing of the issue and the maturing of current bonds issued by the PUD, it isn’t expected that the bond sale for the operations center will change debt service in the long term, and therefore will not have an impact on utility rates. The debt service may also be lower than anticipated due to the ability of the PUD to access “Build America Bonds” through federal stimulus programs. The federal assistance will provide annual rebates to the PUD reduce finance charges.

The commission also awarded a bid of nearly $24.2 million to Rushforth Construction of Tacoma for the construction of the new Johns Prairie operations center. The facility will be the site for the PUD 3 warehouse; field operations such as Shelton line workers; vehicle maintenance, repair and fueling; engineering, telecommunications, the meter shop, transformer and substation maintenance; and various administrative functions.

The PUD will retain a customer service office in downtown Shelton, along with a payment drop. Customers will also be able to make payments, set up accounts and conduct general business at the Johns Prairie facility. Operations at PUD 3’s Belfair office will not be affected by the proposed changes.

PUD 3 has been working on relocation plans for over 15 years, finalizing the acquisition of the Johns Prairie Road property in early 2002.

The total cost of construction and design for the operations center at Johns Prairie is estimated at $34.5 million. The bid for overall construction ($24.2 million from Rushforth Construction of Tacoma) was 17 percent lower than estimates. The bid for site preparation ($243,000 plus tax, went to Zephyr’s, Inc of Allyn) came in at approximately 45 percent of the estimated cost.

Of the total project cost, up to 80 percent is for relocation of the warehouse, including offices for operations personnel who currently work on Olympic Highway North. The remainder will pay for relocation of administrative offices and the development of public spaces.