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Council committee gets primer on revenue bonds and other financing options for IOT housing funds
Summary
City staff and bond counsel outlined how revenue bonds backed by sales tax could advance all or part of the proposed Improve Our Tulsa housing funds, trade-offs including interest and issuance costs, and alternatives such as private placement or bank loans.
Treasury staff and bond counsel briefed the Urban and Economic Development Committee on the process, timing and costs of issuing revenue bonds to advance all or part of the Improve Our Tulsa (IOT) housing funds.
Chad Becker of Treasury explained revenue bonds are repaid from a specific pledged revenue stream (for example sales tax or utility revenue), and that the city typically uses public trusts such as the Tulsa Public Facilities Authority (TPFA) or Tulsa Metropolitan Utility Authority (TMUA) to issue debt without a municipal general-obligation vote. Bond counsel John Weidman described the distinctions between a competitive sale (the city’s usual approach), negotiated/private placement, and direct bank loans, noting private placements or foundation loans are possible but are typically pursued when the security behind the bonds is complex or the buyer is a single accredited investor.
Staff said prior IOT budgeting assumed a $35 million bonding scenario (the committee also discussed issuing up to $75 million in different runs), and that issuing bonds advances funds now but reduces the pool available for programmatic uses because interest and issuance costs are paid from the pledged revenue. Staff estimated competitive issuance costs (rating, legal, printing, trustee fees) in the low six figures and projected interest-cost scenarios that could add millions over the life of the bonds depending on size and rates. Counsel and staff emphasized the trade-off: build and deploy housing funds now and pay financing costs, or wait and preserve principal but face higher construction costs in the future.
Timing for a competitive issuance was estimated at roughly 120 days from decision through closing, with funds typically available within 10–15 days after closing. Alternatives — negotiated sale, private placement, or bank loan — could shorten some steps but typically require a waiver of competitive sale and carry different cost and disclosure implications. Committee members asked about concurrent steps: staff said the RFP for an administrator for the housing fund is being drafted and could proceed concurrently with bonding decisions if the council chooses to accelerate the effort.
No final policy decision was made in committee; staff outlined next steps including TPFA consideration and council resolution to authorize issuance if the council decides to proceed.
