A. Issue
As part of the 2023-2027 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 and Fiscal Impact
Capital Budget
The 2023-2027 Capital Improvement Budget included $18.6 million in general obligation bond and note proceeds for approved projects as shown in Figure 1. The total amount to be borrowed is $16.375 million. This is a not-to-exceed amount although we don't anticipate the amount to change.
Levy-backed bonds are less than budgeted due mostly to using surplus from bonds issues in previous years to fund a portion of the sidewalk improvement program. The Storm borrowing is less than budgeted due to the Honey Creek Storm Sewer Outfall project (4103) being delayed. There will be no Sanitary borrowing as the financing of these projects will be cash financed. There is no borrowing for TIF projects this year. The Water Utility bond issuance will be approximately equal the original budgeted amount.
The bond amortization schedules have been adjusted so that the same impact on the 2024 Budget is maintained and sufficient funds are included in the 2024 Budget to cover the debt service associated with this bond offering. Ten-year terms are being used for general city infrastructure projects as well as storm projects so that the 10 year note issuance is large enough to attract bidders when the notes come to market. A 15-year term is being used for the levy paid bonds that are tied to paving, parks and fire department capital purchases and projects. A 20-year term will be used for the water revenue paid bonds. As was the case in previous years, General Obligation Bonds are proposed instead of Revenue Bonds for the water projects. This is recommended to reduce interest costs, eliminate the...
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