Perkins approves PIDA trust amendment and steps to issue up to $700,000 in sales-tax bonds for library renovation

Perkins trustees and the City of Perkins on Tuesday approved amendments to the Perkins Industrial Development Authority (PIDA) trust and authorized steps to issue up to $700,000 in sales-tax revenue bonds to fund renovation and improvements to a public library.

City officials said the trust amendment adds explicit authorization for PIDA to finance library facilities. David Floyd, attorney with the firm Floyd & Driver, told the governing bodies, “we would like to use the Perkins Industrial Development Authority as the vehicle to issue that debt,” and that amending Article 4 would “give explicit authorization to… issue these bonds for a library.”

The move sets a sales-tax revenue bond transaction that will use collections from a quarter-cent sales tax approved last year for the library as the source of repayment. Floyd explained the financing structure: “So there will be a sales tax agreement that’s entered into between the city and PIDA that provides on an annual basis for sales tax revenues from that specific tax … to be passed over to the authority. The authority will then issue its bonds using those sales tax collections as security and as the source for repayment of the bonds.”

The Perkins Industrial Development Authority resolution authorizes the issuance of bonds, notes or other evidences of indebtedness in one or more series on a tax-exempt or taxable basis in an aggregate principal amount not to exceed $700,000, to finance acquisition, construction, equipping, renovating and improving certain public library facilities and to pay issuance costs. The authority also approved waiving competitive bidding on the initial sale of the bonds so the bonds may be sold on a negotiated basis to an underwriter who will market them to investors.

City officials approved a companion city resolution accepting the trust amendment and separately approved the city’s role as beneficiary to permit PIDA to issue the debt. Floyd said professionals for the transaction will include Stephen H. McDonald & Associates as financial advisor, Floyd & Driver as bond counsel, and D.A. Davidson (Adam Norman named) as underwriter. He also described a likely nine-year financing timeline and said the city will need to “rework the lease” later because the library is currently leased to a library trust that lacks debt capacity; the city plans to give PIDA an interest and lease it back to the library trust so the trust can continue facility operations.

Council members and PIDA trustees voted in favor of the trust amendment, the bond authorization, the waiver of competitive bidding and a declaration of emergency to give the resolution immediate effect and allow negotiations to proceed. The declaration of emergency was stated to allow the city to “proceed immediately with negotiating the sale of the bonds, and going ahead and getting this transaction rolling,” in Floyd’s words.

Officials said designating the bonds as “bank qualified” under Section 265(b)(3) of the Internal Revenue Code may broaden interest from banks by improving their tax treatment of bond-carrying costs. No final sale terms, rates or repayment schedule beyond the anticipated nine-year term were presented at the meeting.

Discussion included brief explanations of why PIDA is being used: because the city faces statutory debt limitations and a public trust does not have the same limitation, allowing the project to be financed without creating city general-obligation debt. No substantive opposition or alternative financing plan was presented during the meeting.

The bodies approved motions to (1) amend Article 4 of the amended declaration of trust for PIDA, (2) authorize PIDA to incur indebtedness for the library project not to exceed $700,000, (3) waive competitive bidding for the initial sale to an underwriter, (4) approve companion city actions accepting the amendment, and (5) declare an emergency to make the city resolution effective immediately.