Finance committee authorizes parameters for $137 million general obligation promissory notes sale

The Madison Common Council Finance Committee on July 28 recommended a parameters resolution authorizing up to $137,000,000 in general obligation promissory notes to finance capital projects approved in the 2025 capital budget. Finance staff explained the borrowing is intended to fund street reconstruction, fleet acquisitions, parks projects, stormwater work, facility remodels and several major projects including the Imagination Center, Warner Park Community Center and a permanent men's homeless shelter.

Dave (finance director) told the committee the $137,000,000 par amount includes roughly $110,000,000 in 10-year notes and $27,000,000 in 20-year notes, with a small taxable component of about $3,000,000. He said a recent state law change now permits promissory notes with 20-year maturities rather than requiring 20-year bonds, removing the earlier referendum step in some cases. Staff described a maximum true interest cost of about 5% for tax-exempt notes and up to 6.5% on the taxable portion and estimated cost of issuance at $375,000.

Presentation slides showed issuance timing, that the city plans to sell approximately 45% of authorized borrowing now (timing tied to project cashflow and federal arbitrage rules), and that sale was expected on Aug. 19. The debt service projections displayed existing debt rolling off on roughly a 10-year repayment cadence while the new debt’s red bars add to debt service in later years. Staff emphasized the city was funding a mix of new projects and previously-authorized borrowing, and that tax increment financing (TIF/TID) revenues and other dedicated revenue streams will repay some portions of the debt where appropriate.

Committee members asked technical and policy questions about the slide decks. Alder Figueroa Cole asked how the chart’s blue bars reflected prior issuances; Dave explained the blue portion shows debt issued in prior years that is still being paid. Alders asked for clarifications on tax increment financing and how TIF/TID districts repay debt; Dave explained the joint review board and council approvals required for TID project plans and that TID proceeds, when used, repay the debt for projects within those district boundaries.

The committee moved, seconded and recorded a unanimous vote in favor of the parameters resolution. Staff said the parameters authorization will expire at the end of the calendar year and the sale is targeted for Aug. 19, 2025.