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Council hears presentation on proposed refunding bonds for Idle Farm (Northeast Collector Phase 3) district
Summary
Bond counsel and financial advisers outlined a plan to authorize up to $18 million in refunding bonds for the Northeast Collector Phase 3 special taxing district to refinance amended 2007 bonds now held by Lapis Advisors LP. Any refunding bonds would be payable solely from district tax-increment revenues and special taxes and must mature no later
Bond counsel briefed the Salisbury City Council Oct. 6 on a proposed refunding of the amended and restated 2007 bonds issued for the Northeast Collector Phase 3 Development District (often discussed as Idle Farm). Counsel said a single holder, Lapis Advisors LP, now owns the restructured 2007 bonds, which had been modified in 2015 to capital appreciation form.
The city attorney and bond counsel explained a proposed bond ordinance that would delegate to the mayor the authority to issue one or more series of refunding bonds, taxable or tax-exempt, up to a combined $18 million. Any refunding bonds would be payable only from incremental tax revenues and special taxes within the existing district and could not mature later than Jan. 1, 2037, the maturity date of the current bonds.
Council members asked how risk is borne if incremental revenues do not materialize. Counsel repeated that the bonds are not backed by the city's full faith and credit: bondholders accept the risk that tax-increment and special-tax revenue may be insufficient, and properties could proceed to tax sale if special taxes are not paid. Staff said Municap Inc., the district financial adviser, will present detailed financial structuring and projections at upcoming meetings.
A preliminary schedule set introduction of the ordinance for Oct. 27 and a public hearing and final consideration for Nov. 10 if the parties decide to proceed. Council recorded consensus to move forward with the ordinance process and asked staff and the financial adviser to return with detailed revenue and debt-service analyses.
