Consideration and Adoption of Ordinance No. 2024-07:  An ordinance of the Council of the City of Flagstaff, Coconino County, Arizona (1) providing for sale and issuance of City of Flagstaff, Arizona General Obligation Bonds and General Obligation Refunding Bonds, in one or more series, and for the annual levy of a tax for the payment of the bonds; (2) approving the form and authorizing the execution and delivery of necessary agreements, instruments and documents related to the sale and issuance of the bonds; (3) delegating authority to the Mayor and Management Services Director of the City to determine certain matters and terms with respect to the foregoing as well as certain matters with respect to the bonds being refunded with the proceeds of the sale of the bonds; and (4) authorizing the taking of all other actions necessary to consummate the transactions contemplated by this ordinance and ratifying all actions taken to further this ordinance.

This ordinance allows for the issuance of General Obligation debt as approved by voters in 2022 and the refunding of prior General Obligation debt. New debt will be issued for the Public Safety vehicles, Stormwater projects, Wastewater projects and Housing programs.  An ordinance for this action is required by City Charter ARTICLE VII - ORDINANCES AND RESOLUTIONS, Section 5 - WHEN ACTIONS ARE TO BE TAKEN BY ORDINANCE.

The City may issue up to 3 Series of General Obligation Bonds. 

Series 2024A General Obligation Bonds will be issued as New Money Bonds in an amount not to exceed $30,000,000 to include Proposition 441 – November 2022 Election Projects: Investing in City of Flagstaff wildfire suppression, stormwater flood mitigation and wastewater treatment infrastructure.

Series 2024B Taxable General Obligation Bonds will be issued as New Money Bonds in an amount not to exceed $10,000,000 to include Proposition 442 – November 2022 Election Projects: Creating rental and home ownership opportunities for residents of Flagstaff.

Series 2024C General Obligation Bonds issued as Refunding Bonds in an amount to be determined by favorable financial returns and market conditions for the purpose of refinancing existing General Obligation Bonds issued.  Actual amount of bonds refinanced will be based on market conditions analyzed at the time of issuance.  

These bonds will be issued as General Obligation Bonds and will be repaid through secondary property tax collections within the current rate of $0.8000 per $100 of assessed valuation.

None.

Priority Based Budget Key Community Priorities and Objectives

• Sustainable and Innovative Infrastructure:  Deliver outstanding services to residents through a healthy, well-maintained infrastructure system.
• Safe and Health Community: Provide public safety services with resources, staff, and training responsive to the community’s needs.
• Livable Community: Actively support attainable and affordable housing through the City’s 10-Year Housing plan as well as other projects and opportunities.

Carbon Neutrality Plan

• Housing for All
  • HA-1: Create housing options for households at all income levels and family sizes occupied by local residents.
  • HA-2: Connect people to equitable housing solutions.
  • HA-3: Preserve affordable housing.

Regional Plan

• E&C.3: Strengthen community and natural environment resiliency through climate adaptation efforts.
• E&C.6. Protect, restore and improve ecosystem health and maintain native plant and animal community diversity across all land ownerships in the Flagstaff region.
• WR.2. Manage a coordinated system of water, wastewater, and reclaimed water utility service facilities and resources at the City level and identify funding to pay for new resources.
• WR.5. Manage watersheds and stormwater to address flooding concerns, water quality, environmental protections, and rainwater harvesting.
• LU.9. Focus reinvestment, partnerships, regulations, and incentives on developing or redeveloping urban areas.
• LU.13. Increase the variety of housing options and expand opportunities for employment and neighborhood shopping within all suburban neighborhoods.
• NH.3. Make available a variety of housing types at different price points, to provide housing opportunity for all economic sectors.
• PF.3. Provide high-quality emergency response and public safety services including law enforcement, fire, medical, and ambulance transport service. 

• Create 1.7: Explore ways to incentivize employers to offer Employer Assisted Housing (EAH) programs.
• Create 1.8: Explore the use of the community land trust model and public/private partnerships to incentivize the development of ownership units that are priced significantly below market rate. 
• Create 3.1: Present 2022 Bond Measure to Council and Community for consideration for additional funding to be leveraged with local, state, and federal dollars.
• Create 3.3: Identify ongoing resource opportunities for the purpose of assisting households experiencing homelessness, households at risk of becoming homeless, first-time homebuyers, and affordable housing targeted to these populations.
• Preserve 2.2: Acquire and rehabilitate already built properties for affordable housing projects when financially feasible.

Yes. Council authorized two ballot measures, Proposition 441 and 442, for the November 2022 elections which voters approved the issuance of debt for the specific projects. On February 7, 2023, Council adopted Reimbursement Resolution 2023-04 for the Proposition 441 Ballot Measures and the Proposition 442 Ballot Measures. 

• Approve the Ordinance as written allowing the City to move forward with the issuance of New Money Bonds and Refunding Bonds as General Obligation debt. 
• Recommend changes to the Ordinance modifying the issuance of either or the New Money Bonds and Refunding Bonds. 
• Do not approve the issuance of General Obligation Debt and provide direction.

On November 8, 2022, the City of Flagstaff voters approved two ballot measures to issue General Obligation Debt.

• Proposition 441 authorizes $57,285,000 in General Obligation debt to be issued and used for investing in City of Flagstaff wildfire suppression, stormwater flood mitigation and wastewater treatment infrastructure.  The initial debt issuance will be for up to $30,000,000.  
• Proposition 442 authorizes $20,000,000 in General Obligation debt to be issued and used for creating rental and homeownership opportunities for residents of Flagstaff.  The initial debt issuance will be for up to $10,000,000.

The remaining debt authorization will be issued when the initial funds are spent and cash is needed for the remaining projects. 

In addition, staff is considering refinancing existing outstanding General Obligation debt.  Staff works closely with the City’s Financial Advisor (Stifel) to review our current debt with regard to possible refinancing opportunities to save the City significant debt service savings. The City will only refinance existing outstanding debt if we can meet favorable savings.  If interest rates or costs turn out to be unfavorable, we will not complete the refinancing.  

The proposed ordinance includes the maximums contemplated to be issued to provide the greatest flexibility in both amount and timing. This authorization allows us to go into the market with the most favorable factors in play including market saturation, rates, and ratings.

While the purpose of this agenda item is to approve an ordinance to allow the City to issue debt, we have included a draft Preliminary Official Statement and Purchase Agreement as informational documents for your review. These documents have been reviewed by our Financial Advisors, Bond Counsel, Underwriters and Underwriters' Counsel. These are substantially complete however may have some changes prior to completion of the debt transactions. Final documents will be available upon request to the Management Services Director.

The New Money Bonds and Refunding Bonds will be paid through the annual levy of secondary property taxes. The City will use strategies, including using secondary property tax reserves and issuing debt that is layered, so that the City can maintain the existing secondary property tax rate of $0.8000 per $100 of net limited assessed valuation.

The community benefits by having the City complete the projects as promised to the voters in the November 2022 election.

The process to select the projects that were voted on by the public involved: Consult, Involve, Collaborate and Empower.
The process to authorize the issuance of debt is to INFORM the public.