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Hilltop Securities presents $15.4 million capital plan; says Josephine's finances are strong enough to support combined issue
Summary
Hilltop Securities presented an analysis recommending a combined ad valorem-and-utility pledge to fund a proposed $15.4 million capital program, citing a recent AA- rating and preliminary property valuations; staff and council discussed timing, debt structure, and potential legislative changes that could limit future financing options
Hilltop Securities advised the Josephine City Council on June 30 that the city's fiscal condition is strong for its size and that a combined issuance of ad valorem-backed and utility revenue debt could fund an approximately $15.4 million capital program while preserving the city's current tax rate in model scenarios.
Hilltop principal Jim Sabone summarized his firm's analysis at the work session and recommended a "double-barrel" pledge (a combination of ad valorem and utility revenues) to finance general government projects and utility improvements together. He said the city had been upgraded to an AA-minus rating and that preliminary taxable value for 2025 was about $327,000,000, up roughly 5.2% versus the prior year (both figures from Hilltop's presentation).
Hilltop's illustrative program split about $4.14 million of general (ad valorem) projects — including drainage work and city-hall renovation design — and roughly $11.3 million of utility projects, yielding a total capital need of about $15.4 million. Under Hilltop's assumptions (including a 5% growth projection and a modeled 25-year amortization), the firm projected the city's debt-service capacity would absorb the new issuance without increasing the modeled ad valorem tax rate.
"The city's in a very strong financial condition...for a city your size," Sabone said, adding that the city's existing debt levels and cash-flow reserves placed it in a favorable position to consider financing multiple projects together. He outlined a proposed schedule: staff finalizes project selections by July 14; the city would publish a notice of intent and, if council proceeds, target a September 8 approval with competitive bidding and a close before the fiscal year end.
Council and staff discussed trade-offs, including the efficiency of bundling projects into a single issuance versus issuing in phases, the risk of higher construction costs if projects are delayed, and the possibility that forthcoming state legislation could limit municipalities' future use of certificate-of-obligation-type financing for some project categories. Hilltop noted the firm would monitor callable bonds and market conditions and pursue refunding opportunities when economically advisable.
City staff and council requested follow-up details: Hilltop agreed to provide revised cash-flow exhibits that reflect the city's utility-customer base (including accounts outside city limits) and to clarify outstanding debt schedules. Council did not take any formal action at the workshop; the presentation was advisory to inform a July draft budget and potential later ordinance to authorize a notice of intent.
