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City staff recommends prepayment to align Huether Family Aquatic Center opt‑out with debt service
Summary
Staff recommended the commission authorize a one‑time prepayment of $572,601 to align the aquatic‑center mill‑levy opt‑out with the center's debt service, citing debt schedule, interest savings and a fund balance that would cover the payment; staff said the prepayment requires future resolution and bondholder approval.
City finance staff told the Yankton City Commission on June 16 that they recommend a one‑time prepayment on the Huether Family Aquatic Center certificates of participation to align the annual mill‑levy opt‑out amount with the center’s annual debt service and reduce long‑term interest costs.
Key figures presented by Finance staff (Lisa) and City Manager Amy Leon:
- Original opt‑out annual amount: $884,043. - Annual debt service for the certificates of participation: $934,131.36 (about $50,000 higher than the opt‑out). - Staff recommended prepayment amount to align the schedules: $572,601 (a one‑time payment proposed for December 2025). - Projected interest savings over the life of the obligation: approximately $128,000. - Available fund balance in the 505 Aquatic Center construction account: $2,153,000 (staff said that is the fund from which a prepayment would be made if the commission approves). - Earliest permitted prepayment date in the financing documents: Dec. 15, 2025; certificate terms require 30 days’ notice and bondholder approval for prepayment. - Minimum required prepayment increments per the lease/certificates: $300,000.
Why it matters: Leon and Lisa said aligning the opt‑out and the debt service would reduce the city’s annual transfer need (staff said the roughly $50,000 gap between opt‑out and debt service would be eliminated) and lower total interest costs on a long‑term obligation that otherwise runs through the bond term. Lisa said staff expects a modest reduction in the mill levy as a result of alignment and noted recent increases in assessed values also affect annual homeowner bills.
Discussion and next steps
Staff said the prepayment would be returned to the commission as a separate resolution if the commission indicates support; bondholder approval is required and staff expects to include the action in a 2025 budget supplement in November. Lisa said bond counsel (Meyer Henry) confirmed the payment rules and that staff will provide required notices and documentation for the bondholder review.
Commissioners indicated general support during the work session but requested no formal vote at the session; staff said it would proceed to a formal resolution and bring final paperwork and timing details back to the commission for action.
Ending
Leon and Lisa asked the commission whether staff should proceed with preparing the prepayment resolution; commissioners expressed no strong opposition and staff said it would bring the required resolution, bondholder notices and supporting materials in the coming months for formal action.
