Committee recommends $19.5 million in capital bond orders; repurposes unspent proceeds to cut future debt service

The Salem City Council Committee on Administration and Finance voted Wednesday to recommend adoption of two Fiscal Year 2026 capital bond orders — a $10,026,020 general fund bond order and a $9,450,000 water and sewer bond order — and to repurpose identified unspent bond proceeds to cover portions of those totals.

City finance director Anna Friedman said the general fund bond order includes roughly $2,500,000 of repurposed, previously issued but unspent bond proceeds identified as “stale” during the city’s debt cleanup exercise. “Identifying these proceeds and repurposing them will reduce the amount of debt service that taxpayers will pay in future years,” Friedman said.

Nut graf: The committee’s action combines new borrowing with the reuse of older, unspent bond proceeds so projects can move forward sooner while limiting the new debt that will be financed. The committee recommended approval of both bond orders, sending them to full council for final action.

Friedman summarized the general fund order as the city’s annual mechanism to fund larger capital projects in the coming fiscal year and said the repurposed proceeds must be spent on a sooner timetable to comply with federal IRS rules. She said the $10,026,020 general fund bond order will be funded with about $2.5 million of repurposed proceeds and a little over $7.5 million of new borrowing.

For the water and sewer bond order, Friedman said the city identified about $196,000 in unspent water/sewer bond proceeds that can be applied, reducing the new borrowing required to a little over $9.2 million. “It’s the same mechanism as in the general fund, but these are for the water sewer projects,” she said.

Councilor Stott moved to recommend approval of the general fund bond order; Councilor Harvey seconded. Chair Merkel said he saw “three hands plus my own,” and the committee carried the motion. The committee then approved the water and sewer bond order on a similar motion, with Stott moving and Harvey seconding.

Discussion and context: Committee members thanked staff for identifying duplicate or unspent proceeds during departmental reviews and for the ongoing “debt cleanup” effort. Friedman noted that repurposing proceeds and applying retained earnings or other one-time revenues where appropriate reduces future debt-service pressure on taxpayers and on water/sewer ratepayers.

Next steps: Both recommended bond orders will appear before the full Salem City Council for final approval and the formal bond issuance process, and staff said projects funded by repurposed proceeds must be scheduled so the proceeds are spent within any federal timing requirements.