To: Mark R. Hafner, City Manager
From: Aaron Rector, Director of Administrative Services
Subject:
Title
Consideration and action regarding a resolution directing publication of notice of the City's intention to issue combination tax and revenue certificates of obligation to provide funds for parks and recreation improvements and related issuance costs.
Action Requested:
Consider action regarding a resolution directing publication of notice of the City's intention to issue combination tax and revenue certificates of obligation to provide funds for parks and recreation improvements and for related issuance costs.
Background:
The certificate of obligations (COs) issuance would be for an amount not to exceed $28,000,000 and will fund the Keller Sports Park project. The proposed COs will be paid from the Keller Development Corporation (KDC) sales tax. They will also be backed by ad valorem in order to receive a better interest rate. The COs will be issued as fifteen-year debt obligations. The anticipated asset life of the projects is anticipated to be at least twenty years which complies with the City’s financial policy requirement that debt obligations not exceed the asset life. The proposed debt structure fits within the KDC long-term financial plans and the KDC will be able to fund both the debt and five-year capital improvements plan.
The resolution provides authorization to reimburse itself for expenditures made prior to the tax-exempt financing. The debt funding will be included on the February 6 agenda and the related 2024 Certificates of Obligations funds should be received around March 12th. Because the project is anticipated to start in early 2024, a reimbursement authorization is recommended to cover any potential cash-flow gaps prior to receipt of the funds.
Financial Impact:
FY 2023-24 budget included an estimated annual payment of $2,557,000 for the proposed debt based upon an issuance of $27,000,000 at 4.75% interest rate. The proposed issuance of $28,000,000 has an estimated annual payment of $2,545,000.
Citizen Input/Board Review:
The KDC and Parks Board have approved of the Sports Park project. In addition, Council created the Sports Park Task Force which was an ad hoc committee made of league representatives that use the Sports Park so they could provide input on the design.
Legal Review:
Bond counsel has prepared the notice of intent resolution.
Alternatives:
City Council has the following alternatives:
- Approve as submitted
- Approve with changes
- Denial
Council Action:
Consider action regarding a resolution directing publication of notice of the City's intention to issue combination tax and revenue certificates of obligation to provide funds for parks and recreation improvements and for related issuance costs.