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Consideration of recommendation by Finance Director for approval of 2025 General Obligation Notes
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Submitted by:
John Ruggini
Department:
Finance Director
A. Issue
As part of the 2025-2029 Capital Improvement Plan, bond proceeds are required to fund approved capital projects. As a result, it is necessary to authorize the issuance of these general obligation and water revenue bonds. It is important to consider the impact of these bonds on the City's total debt capacity, tax and utility rates.
B. Background/Options
Capital Budget
The 2025-2029 Capital Improvement Budget included $35.3 million in general obligation note proceeds for approved projects as shown in Figure 1. The total amount to be borrowed is $26.6 million. This is a not-to-exceed amount although we don't anticipate the amount to change.
Levy-backed bonds are $5.2 million less than budgeted due largely to better than budgeted contract results for the Watertown Plank paving project and delaying real estate acquisition for the State Highway 181 project.
The Storm borrowing is $3.1 million less than budgeted due also to better than budgeted contract figures for the Watertown Plank project inclusive of the 70th Storm Sewer project. This was slightly offset by requiring additional funds for the 2024 paving program.
The bond amortization schedules have been adjusted so that the same impact on the 2026 Budget is maintained and sufficient funds are included in the 2026 Budget to cover the debt service associated with this bond offering. Within that issuance, the levy funded portion will be repaid over 15 years, sanitary and storm over 10 and water over 20 years. As was the case in previous years, General Obligation Notes are proposed instead of Revenue Bonds for the water projects. This is recommended to reduce interest costs, eliminate the need for a debt reserve and provide debt coverage relief
Figure 1
The specific projects included in these totals are shown in A...
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