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Staff briefs council on extending $16.6M bond anticipation note for Shoreline Self Storage; decision deferred to May 5
Summary
Staff presented ordinance 1034 to extend a $16.6 million bond anticipation note tied to the Shoreline Self Storage property from June 1, 2025 to June 1, 2028; staff said the self-storage fund will cover higher interest costs but the item will return for council consideration May 5.
City staff presented Ordinance 1034 on April 28, 2025, recommending a three-year extension of a $16,600,000 bond anticipation note (BAN) tied to the Shoreline Self Storage property. Council took no action; staff said the ordinance will return on the May 5 consent agenda to allow for closing arrangements before the existing balloon payment is due June 1.
Joe Brandstetter, Shoreline’s administrative services director, said the principal would remain $16.6 million while the interest rate on the BAN would increase from the prior 2.75% to about 4.95% under current market conditions. Staff compared the prior three-year interest cost (about $1.2 million total, roughly $427,000 annually) with the higher cost under the extension (approximately $821,000 annually). Brandstetter said the Shoreline Self Storage fund’s balance and operations are expected to cash-flow the higher interest and that there is no impact to the general fund because the self-storage operation is a separate fund.
Brandstetter described next steps: council consideration at the May 5 meeting, a scheduled closing on May 21 and the need to complete refinancing or other action before the June 1 balloon maturity. He also discussed options after the extension, including refunding, structured paydown, sale or use of future aquatics facility funding mechanisms if the city pursues an aquatics project on the property.
Council members asked about the current self-storage fund balance and whether it would be prudent to partially pay down principal. Brandstetter said the fund balance at the end of the calendar year was about $1,400,000 and reiterated that the extension preserves optional prepayment and refinancing choices: the city can prepay or refund after 2.5 years. Council members discussed that paying down the outstanding balance at the time a bond measure for an aquatics facility is presented to voters would be an option.
No formal motion or vote was taken on April 28; staff will return with the ordinance on the May 5 consent calendar for council action.
