Oviedo delays police‑annex bond; city projects strong fiscal position for FY2025‑26

City staff told the Oviedo City Council they will delay issuing bonds for the planned police annex until the project’s expenditures fall inside the three‑year federal arbitrage period, and presented updated FY2025‑26 budget projections that leave the city with a projected general‑fund balance of about $16.5 million to $17 million.

Why it matters: delaying the bond avoids a near‑term increase in the city’s millage to cover bond debt, gives staff time to better forecast capital spending and preserves flexibility for next year’s budget when debt service for the police annex is likely to be lower.

At a work session, a city staff member summarized recent advice from bond counsel and a project consultant: “pretty much advised us not to do the bond issue this next year for the police annex,” because the spending schedule means the bonds’ three‑year arbitrage period would not begin in earnest until June or July of next year. The staff member said the city can use pledged sources — $2.2 million of general‑fund cash, ARPA interest and police impact fees — to fund the interim period before bond proceeds would be needed.

The staff presentation projected total FY2025‑26 revenues of roughly $42 million to $43 million, an anticipated ad valorem (property tax) growth of about $1.6 million initially modeled at 7% and an updated property‑appraiser estimate of 7.5% that staff said could add roughly $75,000. Staff said they had originally proposed using $4.1 million of fund balance but that the city will likely end the year with a fund balance north of $16 million, well above the city’s 15% internal policy and the Government Finance Officers Association (GFOA) best practice target of 16.67%.

Staff gave several line‑item highlights: pension rates (the actuary’s figures) fell in staff projections from 19.7% to 17.68%; health‑insurance costs were reduced in the budget by about $213,000 based on favorable trends and a workplace wellness clinic; vehicle‑replacement funding showed a roughly $79,000 increase tied to payoff of prior leases; and intergovernmental revenues such as revenue sharing and the half‑cent sales tax remain a concern because they are consumption‑based and sensitive to statewide economic trends.

Deputy Mayor (chairing the meeting) and other council members asked about schedule impacts given an 18‑month design and construction timeline. Staff said the city would fund the early construction period using the pledged $2.2 million plus ARPA interest and impact fees, and reminded the council that the city had previously passed a bond resolution allowing reimbursement of pre‑issuance costs from future bond proceeds. “Once we get the go ahead to go for the bonds, with our bond counsel, that we can prove that we're not going to have issues with the arbitrage period, we will do so,” the staff member said.

Staff also ran through millage calculations. The current operating millage was shown as 5.954 mills; adding a GEO bond for a park project (0.007 mills) and an Oviedo‑on‑the‑Park component (0.114 mills) produced an unchanged total millage of 6.075 mills compared with the current fiscal year.

No formal vote was taken on the bond timing during the work session; staff described the decision as a course correction based on bond counsel advice and the council continued to discuss budget tradeoffs. Staff said they will return with an updated general‑fund outlook in June and will present the water/sewer, stormwater and fleet funds alongside the updated general fund figures. Staff provided a target timeline: updated presentations on June 23, and potential bond‑issuance activity to begin in mid‑next year with an issuance likely in late September or early October if arbitrage timing is resolved.

Council members asked whether the city should lower millage now because of improved property valuations; staff cautioned against reducing the millage in the current cycle, saying it could weaken the city’s position for next fiscal year when the police annex debt becomes a factor. The meeting closed the budget discussion with staff direction to continue refining revenue forecasts and capital priorities and to return with the June updates.

Less‑critical details: staff said contingency reserves were being held at $400,000 in the proposed budget and that transfers in and out — including an estimated $1.4 million transfer to the IT fund and transfers to the insurance and technology improvement funds — are programmed in the current plan.

Next steps: council will receive updated revenue estimates and fund‑specific presentations in June; staff will revisit bond issuance timing with bond counsel before starting a formal issuance process.