Lakewood approves short-term notes to fund $32.7 million in capital projects after finance briefing

Lakewood City Council on Feb. 18 approved ordinances authorizing short-term borrowing and related budget transfers and leases to fund this year's capital program, after a presentation from the finance director and the city's outside financing team.

The council voted to authorize up to $32,695,000 in debt anticipation notes for projects listed in the capital budget and to approve transfers and equipment leases tied to the adopted budget. The package includes funding for sewer and water improvements, city facilities, parks and sidewalks and transportation resurfacing; the council adopted the ordinances by voice vote at the Feb. 18 meeting.

The legislation and staff presentation emphasized that the borrowing is being issued as short-term bond anticipation notes this year and that staff will consider rolling the notes into longer-term bonds when market conditions are favorable. "Bond anticipation notes is what we what they are. It's a 1 year borrowing. These will be due within 1 year of when we issue them, and we can roll them over," said Catherine (bond counsel) during the finance committee briefing. Jeff Rink, Managing Director at KeyBank Capital Markets, told the committee: "I think you're all aware... the city is rated double A2 by Moody's." That credit rating, the advisers said, helps Lakewood secure lower borrowing costs.

The package the council approved includes a combination of (a) an estimated $6.32 million for refuse/parking/roof/HVAC and other public building work; (b) $2.2 million for Edgewater Drive, Summit Avenue and other street resurfacing; (c) $4.05 million for City Hall, Winterhurst Ice Arena, Fire Station No. 3 and public works garage improvements; (d) $9.325 million for water improvements; (e) $300,000 for sidewalks; (f) $500,000 for parks including Lakewood and Kaufman Park improvements; and (g) $10 million for sewer improvements. Finance staff described the total plan in the legislation as $32,695,000, which includes roughly $6.3 million to retire a note that matures in April and more than $26 million of new projects.

Director Maureen Mahoney explained that the city structures most capital projects so each has a dedicated revenue source that is not the general fund. "Every project is funded from a revenue source dedicated for that project that is not a general operational eligible revenue source," she said at the finance committee meeting. The presentation also noted that the city adopted an income-tax pledge for certain issues that allows some debt to be treated as "exempt" under state limits and improves credit treatment when combined with dedicated water/sewer revenues.

Council members asked for additional visuals and historical charts showing assessed valuation and debt over time; staff agreed to provide follow-up materials. Public works staff and the finance adviser also reviewed why the city issues notes first (short-term financing while projects proceed) and converts to bonds later when projects are complete and market conditions make long-term issuance advantageous. As the bond counsel noted, the legislation includes conservative estimated terms so staff can complete transactions without returning to council for small pricing variances.

Other finance-related items considered and approved at the Feb. 18 meeting: - An ordinance authorizing quarterly transfers/advances consistent with the adopted 2024 budget and the 2025 spending plan. - An ordinance authorizing multi-year equipment leases (financial leases) not to exceed the specified caps in the ordinance; council members asked for the fleet replacement spreadsheet that had been shared with them. - A resolution authorizing city officials to apply for and accept a Water Supply Revolving Loan Account (WSRLA) loan with principal forgiveness for the 2025 lead service line replacement pilot on Cannon Avenue, Jackson Avenue and Waterbury Road; staff requested expedited first-reading consideration to meet the EPA/OEPA application window. - A notice of acceptance for a $104,400 Cuyahoga County Preventive Maintenance reimbursement for crack sealing and pavement markings on county roads.

Votes at a glance - Ordinance 2-20-25 (transfers in advance of certain funds): adopted (voice vote; tally not specified). - Ordinance 3-20-25 (equipment leases authorized): adopted (voice vote; tally not specified). - Ordinances 4-20-25 through 10-20-25 (note authorizations for specified capital projects, various par amounts listed in the ordinance texts): adopted (voice vote; tally not specified). - Resolution 2025-05 (authorize application/acceptance of WSRLA funds and designate repayment source for 2025 lead service line replacement): adopted (voice vote; tally not specified).

What this means City officials said the approach preserves flexibility: short-term notes preserve borrowing capacity while projects proceed; converting to longer-term bonds will be timed for potential savings. Finance staff and the outside advisers recommended continued monitoring of market conditions and pledged to provide the council with additional charts and historical context on assessed valuation and debt loads.

Next steps Finance staff will provide the follow-up materials requested by council (historical debt/assessed-value charts and the funding-structure visual showing millage/pledges to specific debt service). Staff also plans to return to council with the bond-issuance timing, including a potential 2026 refunding opportunity for older issues.