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Council approves bond insurance, TIF plan changes to free reinvestment-zone funds for projects
Summary
The Temple City Council approved replacing bond reserve funds with surety insurance and amended the tax increment financing plan to reallocate funds freed by a recent refunding, moves staff said will release more than $5 million for reinvestment-zone projects.
The Temple City Council on Aug. 21 approved a package of financing changes for Reinvestment Zone No. 1 that city staff said will free funds held in bond reserves and reallocate them to projects inside the zone.
City financial staff told the council the action replaces cash reserve accounts for two 2020 revenue bond issues with debt-service reserve surety policies, freeing money that had been set aside when the debt was issued. "That refunding released that reserve and now that and replaced it with the insurance," Finance staff said during the meeting.
The change follows a bond refunding the council authorized in May. Staff said the two reserve accounts had been funded from bond proceeds at roughly $1.9 million and $1.3 million, respectively; purchasing surety coverage instead will allow the city to deploy about $3 million that had been reserved. An amendment before the council also allocates in excess of $5 million from released reserve funds to projects in Reinvestment Zone No. 1, staff said. The city also reported average annual savings from the refunding of about $70,000.
City staff said the actions are enabled in part by a recent upgrade to the reinvestment zone's bond rating and that the surety purchase is a one-time premium; the insurance will remain in force for the life of the bonds. The council authorized purchasing Build America Assurance (BAM) surety coverage and approved a First Amendment to the third supplemental ordinance related to the zone.
The ordinance and insurance purchase were presented during a public hearing; no members of the public spoke on the item. Mayor Pro Tem Walker made the motion to approve; Council Member Kirkendall seconded. The measure passed unanimously, 5-0.
What this means for projects: staff described the action as a way to put previously reserved cash to use on planned reinvestment-zone projects rather than leaving it idle in reserve accounts. The ordinance's amendment allocates the released funds to specific zone projects, though detailed project-level allocations were not enumerated during the council discussion.
The council voted on the measure during the meeting's public-hearing segment and approved the related ordinance and insurance commitment without dissent.
Council action and next steps: With the amendment and insurance purchase approved, staff may proceed with allocating the freed funds to the reinvestment-zone project list in accordance with the amended plan. Any specific project contracts or construction authorizations would be brought separately to council as required.
