Franklin City Council adopts tweak to sewage works revenue bond ordinance to permit surety instead of escrow

The Franklin City Council on a unanimous voice vote approved Ordinance 2025-05, amending Ordinance 2025-03 so the city may purchase a surety bond rather than set aside a portion of sewage works bond proceeds.

The change, introduced at the council's previous meeting, allows the city to use a surety instead of earmarking bond proceeds. "What was being amended ... was to allow us to not, to also use a surety as opposed to setting aside a portion of the bond to pay, because it's required to maintain, basically retain each account," City Attorney Lynn Graham said during the public hearing. She added that the amounts and the terms of the bond remain the same as previously approved.

Graham said the city's financial adviser, Mr. Peters, recommended the amendment because reserving proceeds reduces available funds and interest earnings, which can increase borrowing; buying a surety, she said, is more cost effective. "Our financial advisor, Mr. Peters recommended that we amend the ordinance to allow us to go purchase a surety bond because if you set aside a portion of the bond proceeds and you lose the interest on that and the ability to use that, you have to borrow more money and it was more cost effective to use a surety," she said.

No members of the public spoke during the hearing. A council member moved approval and a second was recorded; the motion passed on a unanimous voice vote with no roll-call objections recorded in the transcript.

The amendment does not change the authorized bond amounts or repayment terms included in the previously adopted ordinance; it changes the mechanism the city may use to secure amounts required to maintain certain accounts tied to the sewage works bond. The council closed the public hearing before voting.

Council members did not raise additional questions on the record after the public hearing was closed.