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Council signs off on lease and moves forward on $40 million first tranche of redevelopment road bonds
Summary
The Johnson County Council approved a lease between the Redevelopment Authority and Redevelopment Commission and endorsed the financing plan for a first $40 million tranche of county road projects using economic development income tax revenues and a property-tax pledge as bond security.
The Johnson County Council on Aug. 11 approved a resolution authorizing a lease between the Johnson County Redevelopment Authority and the Johnson County Redevelopment Commission and reviewed the plan of finance for a tranche of road projects.
Jeff Peters, financial adviser with Peters Franklin, briefed the council on the bond structure and the changes in state law that affect how the county can secure income-tax revenue for capital projects. Peters said the county will likely need a property-tax pledge to secure the bonds even though economic development income tax receipts will be used to make payments. "You are going to have to secure it with a different source even though you'll still make the payment from those income taxes. You'll need to secure it, and the security that will be best for you is the property tax base for the redevelopment commission," Peters said.
Peters told the council the commissioners and highway department identified a $40,000,000 tranche for the first set of projects. "At this point in time, the highway highway department, the commissioners, they've identified that they need a $40,000,000 tranche to undertake this first part of it," he said. Peters added the county could issue callable 20-year bonds, pay down balances early, or issue additional tranches in future years depending on legislative changes and project timing.
The briefing covered three financing elements: (1) using the economic development income tax receipts to make debt service payments; (2) securing bonds with a county property-tax pledge (excluding cities with their own redevelopment commissions) to improve marketability and interest rates; and (3) a revenue pledge from TIF parcels to preserve that revenue stream as parcels develop. Peters said under the new state income-tax regime the county would have additional capacity beginning in 2028 but also an annual approval requirement for the income tax in 2028 and later.
Council member Jonathan Myers moved to approve the resolution authorizing the lease; Ron Bates seconded. The motion passed unanimously.
The measure was introduced as an ordinance for further action later: the council was notified that ordinance 25-06 will be formally presented and return for approval in September after scheduled public hearings. Peters said staff are preparing plan-of-finance details and will provide bond documents to the council before any issuance.
