Adopt Resolution #23-231 Providing for the Sale of $8,640,000 General Obligation Bonds, Series 2023A

Purpose:  To provide funding for $7M of COR Improvements consisting of:  COR tree clearing, Hy 10/Ferret Street Reconstruction, COR mass grading and COR infrastructure plans and specs for Zeolite Street, Ramsey Parkway and Center Street and approximately $1.45M for capital equipment as outlined in the 2024 General Fund Budget.

Background:

A COR analysis Update was prepared by Bolton and Menk, Inc.  Included in this analysis and confirmed by City Council were the following priorities: 

• Grading, lining and installing storm sewer for the Waterfront stormwater pond
• Filling low-lying COR properties using fill from the Waterfront pond excavation
• Design and prepare plans and specifications for Zeolite Street, north end of Center Street and Ramsey Parkway between Sunwood Drive roundabout and Willemite Street.

All items listed above have been approved by City Council at various dates in 2023 with the funding stated to be the issuance of Tax Increment bonds in the estimated amount of $7,000,000.  

After much discussion in regards to the proposed 2024 General Fund Budget and respective tax levies, it was determined that the unfunded capital equipment items would be funded via the issuance of capital equipment debt.  The total amount of financing needed was $1.453Million.

One bond will be issued which will incorporate the funding needs as outlined above in the estimated amount of $8,640,000 which includes estimated underwriter and issuance costs (final amount will be known at time of sale).   The Tax Increment side of the bond will be for a period of 15 years and the Capital Equipment will be for a term of 10 years. 

Given current market conditions, if the city were to sell the approximately $8.640M of General Obligation bonds, the annual debt service would be approximately  $825,000 for the first 10-years - which includes $645,000 to be funded from tax increment and $180,000 from the property tax levy (Capital Equipment portion). For years 11-15 of the issue, the annual debt service will be the $645,000 which is for the tax increment side only.

The debt service numbers presented (Pre-sale report attached) are strictly estimates based on current market conditions plus 50 basis.  The actual bond pricing is proposed to be held on October 24, 2023 and brought back to City Council for awarding the sale of the bonds October 24, 2023. 

 

The city is scheduled to have a bond rating call with Standard and Poors (S&P) on October 12, 2023.

1.  Motion to Adopt Resolution #23-231 Providing for the Sale of $8,640,000 General Obligation Bonds.

2.  Motion to not Adopt Resolution #23-231.

$7M of debt issuance will fund the COR area improvements and $1.453M of issuance will fund the 2024 Capital Equipment expenditures as outlined in the 2024 General Fund Budget.

Staff recommends option #1 as the COR improvements have already been authorized by CityCouncil and the $1.453M for capital equipment was supported as the funding source for the 2024 Capital purchases.

Motion to adopt Resolution #23-231 Providing for the Sale of $8,640,000 General Obligation Bonds, Series 2023A.