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City hears proposal to pursue up to $10 million in general-obligation debt using insured bonds
Summary
Financial advisers presented a plan to underwrite up to $10 million in general-obligation bonds using an insurer-backed structure that could rely on unaudited financials for underwriting; council gave direction to proceed with due diligence and public-hearing scheduling.
Debborne Company, the city’s financial advisor, summarized options for addressing urgent capital needs and presented a path to borrow $2 million, $5 million or $10 million in general-obligation bonds. The firm said discussions with traditional lenders suggested concessions that were unfavorable; an alternative approach offered through Cruz and Associates (R.T. Taylor) could underwrite a bond sale using unaudited financials with bond insurance to attract investors.
Advisors described a 20-year amortization with a typical 10-year par call and estimated interest rates in the mid-4% range (around 4.6–4.7%) depending on final structure. Estimated transaction costs were shown in the presentation (rough estimate $350,000), and advisors said the city could structure principal payments to commence in FY 2028 to align with an anticipated drop in existing debt service and minimize near-term budget impact.
Advisors said insurers would underwrite and effectively provide the credit rating for the bonds (because the city currently lacks a rating), subject to due diligence. The presentation noted prior similar work for other Virginia localities and discussed the need to engage bond counsel and schedule required public hearings before council adoption of a financing ordinance.
Council members expressed support for proceeding with further due diligence. The city and its advisers will gather unaudited financial reports for the underwriting team, engage bond counsel and publish the required notices for public hearings; final authorization of any borrowing would return to council for a formal vote and ordinance adoption.
