Finance committee OKs parameters for $137 million general obligation promissory notes sale

The Finance Committee on July 28 voted unanimously to recommend a parameters resolution authorizing the issuance and setting parameters for the sale of general obligation promissory notes totaling up to about $137 million to finance capital projects in the adopted 2025 capital budget.

Finance staff explained the borrowing will fund a mix of projects including street reconstruction, fleet replacement, parks projects, stormwater work, facility remodels and loans tied to tax increment finance districts. “What’s before you in the parameters resolution is a total borrowing of about a $137,000,000,” the presenter said, outlining that roughly $110 million of the proposed issuance would be 10‑year notes and about $27 million would be 20‑year notes; approximately $3 million would be taxable.

Staff summarized why the city stages borrowing: project timing and federal tax arbitrage rules limit borrowing too far in advance. They also reminded the committee that a statewide change in law now permits promissory notes with a 20‑year maturity, eliminating a prior sequencing requirement for issuing bonds and potential referendum steps. Staff said they expect to sell the notes on or about Aug. 19 and set maximum parameters in the resolution, including a maximum true interest cost of about 5% for tax‑exempt portions (6.5% maximum for taxable) and a maximum cost of issuance of $375,000.

A chart shown to the committee broke the issuance into about 529 projects and programs, with 19 projects of $1.5 million or more accounting for about $60 million of the proposed par amount. Examples cited included the Imagination Center, Warner Park Community Center, a permanent men’s homeless shelter, initial work on John Noland Drive and various fleet and streets projects.

Alder Figueroa Cole and others asked clarifying questions about the debt‑service graph and the composition of the columns showing existing versus new debt service; staff explained that earlier‑issued debt rolls off on roughly a 10‑year schedule while new issuances add new debt service. Committee members also asked about the relationship between tax increment financing (TIF/TID) and the borrowing; staff explained that projects within a tax increment district can be financed with debt repaid from tax increment revenues and that project plans and joint review board approvals govern TID financing.

The committee recorded a unanimous vote in favor of recommending the parameters resolution to council.