Mesa treasurer presents $168 million general‑obligation and $307 million utility financing plan; council hears 25‑year terms and 10‑year non‑callable condition

City Treasurer Mark Hute presented a 2025 financing plan to the Mesa City Council that proposes issuing new general obligation bonds and utility system revenue obligations to fund major capital projects, and outlined the timing and structuring details staff intend to seek from the market.

Hute described the financing plan’s two primary components: general obligation (GO) bonds and utility system revenue obligations. He said the GO target proceeds were $168,000,000 with approximately 63% directed toward public safety projects (examples cited in the presentation included fire stations, Gateway Library funding and police headquarters renovations). Hute said proposed utility obligations would target $307,000,000, with roughly two‑thirds of that amount for water projects including Advanced Metering Infrastructure (AMI), the Central Mesa Reuse Pipeline and the Signal Butte Water Treatment Plant expansion.

Hute said new issuances would have a maximum stated maturity of 25 years and outlined a policy objective of repaying at least 25% of principal in the first 10 years for shorter‑lived assets. He and bond counsel Zach Sakas (Greenberg Traweg) explained that the bonds would be non‑callable for a 10‑year period, an industry standard that helps reduce investor reinvestment risk and generally lowers interest rates for issuers. Sakas said the non‑callable period is commonly requested by investors and, while it narrows refunding options for a decade, it typically reduces the overall interest cost.

Council members asked about refinancing opportunities, call provisions and the limits of tax‑exempt issuance. Hute and bond counsel said the city evaluates refunding opportunities throughout the year but noted the current interest‑rate environment offers few attractive refunding windows. Staff also described a short timing plan: council consideration of authorization (council action to authorize staff to access the market) was expected at the next regular meeting; bond sale was projected for the week of April 21, with proceeds received around mid‑May.

Staff also discussed debt service projections showing relatively flat annual GO debt service of about $47 million for approximately the next seven years before declines appear later in the schedule; the utility debt service schedule shows larger project‑driven swings but staff said they manage the city’s long‑term obligations to avoid major spikes in tax levies or utility rate impacts. Hute noted the city plans to limit new issuance terms to 25 years and to seek structures that help maintain predictable annual payments.

Several council members raised questions about capacity limits, the city’s legal debt capacity percentage on assessed valuation, and how previously authorized but unissued bond authorizations will be scheduled. Finance staff explained that assessed values and reserves can affect when principal is prepaid and how authorizations are drawn down; they said in some instances reserves or excess collections can be applied to principal in a given year, which explains certain timing and principal amounts shown in debt‑service charts.

Ending: Council did not vote on issuance during the study session; staff said they will return with formal authorization items on the council agenda and will present sale results after the bonds are marketed.