Scottsburg council approves first reading of bonds to fund Maple Run infrastructure

The Scottsburg City Council voted on first reading April 14 to authorize the issuance of taxable economic development revenue bonds of up to $3,500,000 to finance public infrastructure for the Maple Run residential project.

The ordinance, described by bond counsel Matt Duncan as tied to an Indiana Finance Authority residential infrastructure program award, covers public improvements for an initial phase of about 75 housing units and sets a closing date of May 30 if subsequent approvals proceed.

The ordinance matters because it funds public infrastructure — new roadways, sidewalks, water and sewer mains, stormwater systems and street lighting — needed to support the first phase of the subdivision. Matt Duncan, an attorney with Frost Brown Todd who represented the city as bond counsel, told the council the bond ordinance establishes maximum financing parameters and accompanies a financing agreement and trust indenture required by the trustee and the Indiana Finance Authority.

“The bond funds will actually be used for financing certain public infrastructure improvements related to it, including new roadways, sidewalks, water mains, sewer mains, stormwater, street lights, and other infrastructure improvements,” Matt Duncan said during the April 14 meeting.

Duncan and the city’s financial adviser, Jason Selma of Baker Tilly, said the ordinance sets a maximum borrowing limit of $3,500,000 but that the Indiana Finance Authority award currently stands at $1,875,000 and that the final issued amount could be lower. Selma said the larger maximum preserves flexibility if additional funds become available.

Council members and city staff described protections the city will seek in closing documents. The financing is expected to be reimbursement-style (the developer pays infrastructure costs and then submits invoices for reimbursement), and the ordinance contemplates a taxpayer agreement and likely personal guarantees from the developer to cover any shortfall while the TIF (tax increment financing) revenues are ramping up. Bond counsel said the housing TIF is the pledged payment source; if TIF revenue falls short before houses are built and taxed, the developer would be required to cover the shortfall under the anticipated taxpayer agreement.

Bank of New York Mellon is named in the bond documents as the likely trustee, and Duncan said the trust indenture language in the ordinance is a standard protection for bond purchasers. The timeline Duncan outlined calls for the county Economic Development Commission to hold a public hearing April 24, a council second and final reading on April 28 and a bond closing on May 30, subject to final documents and approvals.

The council approved first reading unanimously and asked staff to circulate draft closing documents before the April 28 meeting so members could review updated drafts before final consideration.

Next steps: the redevelopment/EDC public hearing on April 24, city second and final reading on April 28, and a planned bond closing May 30 if approvals and documents are finalized.