Staff recommends approval of the resolution amending and restating the parameters for the Series 2026 Stormwater Bonds.

City Council approved resolution 26-11363 establishing parameters and authorizing staff to proceed with the bond sale for the 2026 storm sewer bonds. The market has moved a bit more than anticipated, and if the City were to issue debt today, it is expected that we would be slightly above the established parameters, making it impossible to complete the transaction. As a result of the market movement, staff is seeking an amended resolution increasing the true interest cost parameter from 5.0% to 6.15%

On August 24, 2026 City Council approved resolution 26-11363 authorizing the City staff to proceed with the issuance and sale of its Storm Sewer Revenue and Refunding Bonds. This original resolution established the parameters that staff was allowed to negotiate the bond sale within, which included a maximum true interest cost of 5.0%. After approval of this resolution the City proceeded with the bond sale documents, preparing to accept bids on October 6th. Between August 24th and October 6th the market began to move upward quite a bit, moving in such a way that would likely exceed the parameters established by City Council, making issuing the debt unfeasible. As a result, staff recommended delaying the bond sale and seeking an amendment to the original parameters resolution to adjust for the market movement that occurred. This amended parameters resolution increases the authorized true interest cost to 6.15%. 

If approved by City Council, staff will proceed with the bond sale on October 20th, 2026. Staff will execute the bond documents on the day of the sale, if they are within the approved parameters. Final bond resolution will be sent to City Council for approval at the Nov. 9, 2026 meeting.

The Series 2026 Bonds are revenue bonds, payable exclusively from storm sewer system revenues. No property taxes will be levied for repayment. The total amount borrowed will not exceed $11 million, and will be less than 6.15% interest. Actual costs will not be known until bids are opened.

Refunding the Series 2013 and Series 2015 Bonds is expected to reduce total debt service cost, lowering interest expense over the remaining life of the bonds. The resolution requires that refunding must result in total debt service savings and that proposed terms satisfy the 125% net revenue coverage requirement if any outstanding bonds remain non-refunded.

The bonds may include funds for project costs, refunding costs, reserve fund requirements, and issuance expenses. Final principal amounts, interest rates, and maturity schedules will be determined at the time of sale.

Approve the resolution amending the parameters, authorizing staff to issue the debt reflecting the market changes that have occurred. (recommended)

Do not approve the resolution amending the parameters, requiring staff to seek bids at a true interest cost of less than 5.0% (Resolution 26-11363). This would be unlikely to occur in the current market, effectively killing the issuance of the debt, and significantly delaying the timeline by which the storm projects will be completed