Council authorizes publication of notice to issue up to $43.2M in certificates of obligation; utility refunding planned to capture interest savings

The City Council approved a financing plan that will move the city toward issuing certificates of obligation (COs) for capital projects and advancing a proposed utility revenue bond issuance and refunding aimed at reducing debt service costs.

Key approvals and amounts

- The council adopted a resolution authorizing the publication of notice of intention to issue up to $43,200,000 in certificates of obligation as included in the FY25 capital budget. - The broader financing plan presented to council contemplates multiple transactions totaling roughly $379.8 million across taxable and tax‑exempt vehicles: $30M in general‑obligation (voter‑approved) bonds (from the 2022 authorization), $38.72M in property‑tax‑backed COs, taxable COs for solid waste, $11.12M in tax notes and a utility system revenue bond program that includes $175M of new project funding and $120M of refunding of higher‑rate debt.

Public finance rationale and ratings

Victor Quiroga of Specialized Public Finance presented market context and financing rationale. He told council that the utility refunding is structured to preserve the original maturity schedule while lowering interest rates; preliminary savings estimates for the refunding were approximately $5.7 million in interest cost reductions. Quiroga summarized the city’s strong credit profile and two‑notch difference between property‑tax‑supported debt (double‑A category) and utility revenue obligations (a notch below), and said the city’s ratings support favorable interest rates in the market.

Use of proceeds

Staff identified project categories to be funded by the COs and notes: streets, parks and recreation, public facilities, stormwater, public health and safety and solid waste equipment. Sergio Saino (director of finance and procurement) told the council the city has used a mix of funding sources (cash, ARPA, COs, bonds) to start and reimburse projects and that some COs proposed reflect reimbursements for work already underway or near completion.

Council discussion

Several council members raised concerns about use of COs. Some members urged restricting COs to bridge short gaps or for true emergencies rather than as a primary financing mechanism; staff and finance argued the city is increasingly using “just‑in‑time” issuance to match debt issuance with when projects are expensed and to avoid keeping large debt proceeds idle. Council members also asked for clarity on which projects were included in the CO package and requested the capital‑project backup materials in the budget packet.

Schedule and next steps

The plan anticipates bringing the utility system revenue refunding to council in June (first and second readings) and the property‑tax supported transactions in July, with an anticipated closing later in the summer. The staff presentation noted the need to confirm certified property values before issuing property‑tax debt so the city’s tax rate posture remains consistent with previous public notices.

Ending

The council approved publication of the notice of intent to issue the COs and directed staff to continue the structured financing plan that includes the utility refunding. Staff said it would return with formal bond ordinances, required readings and further detail on individual projects and estimated debt service impacts prior to final issuance.