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Council approves parameters resolutions for two 2025 bond issues totaling up to $10.35 million
Summary
The council approved parameters resolutions sending two bond financings to the June pricing process: a not-to-exceed $9.75 million general-obligation issue for street, alley and utility projects and up to $600,000 in taxable TIF bonds for the mall project.
The Virginia City Council on Tuesday approved parameters resolutions that clear the way for two bond financings the city intends to price in early June.
George Eilertsen of Northland Securities, filling in for Baker Tilly's Steve Scharf, summarized the schedule: the council reviewed parameters May 20, the council will consider formal approval May 27, bond pricing is targeted for June 3, and a ratifying resolution would follow at the June 10 council meeting.
The first financing is a general-obligation bond for street and utility improvements (projects cited included 14th Avenue, 20th Street, Southern Drive and alley work) with a preliminary principal amount of $9,140,000 and a "not to exceed" amount in the resolution of $9,750,000. The parameters resolution sets a not-to-exceed true interest cost of 6.5 percent; Eilertsen said market conditions at the time showed a likely true interest cost of about 5.6 percent.
"Today you're not considering issuance of the bonds," Eilertsen said. "This is a parameters resolution" to authorize a pricing committee (the mayor, the administrator and the finance director) to lock final terms.
Council discussion covered term length and ratings. Eilertsen explained that the bonds are non-rated and most of the issuance will be structured over 15 years, while the assessment portion was moved to a 20-year term to improve affordability for assessed property owners. He noted the city's recent bond rating is "Baa2," and that obtaining a formal rating carries a cost that, for the projected sizes, would not likely improve the interest rate enough to recover the rating fee.
The council approved the motion on item 2A by voice vote; the motion carried.
The second financing is a taxable general-obligation tax-increment bond tied to public financial assistance for the mall redevelopment. The action authorized up to $600,000 (resolution not-to-exceed amount) with an anticipated issuance of about $560,000 and a not-to-exceed true interest cost of 7.5 percent; Eilertsen estimated a market cost near 6.77 percent for a 15-year taxable structure. The council approved item 2B by voice vote.
Both approvals were parameters resolutions only; the city will return to the council after pricing to ratify final sale terms.
Councilor Johnson announced a recusal on the alley assessment vote because the assessment could affect his personal property.
