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Holiday council approves master lease to enable up to $11.5 million in lease-revenue bonds
Summary
The council voted unanimously Sept. 18 to authorize a master lease with a newly formed Local Building Authority, creating bond security that allows the city to finance City Hall and Spring Lane improvements using up to $11.5 million in lease-revenue bonds.
The Holiday City Council voted unanimously Sept. 18 to approve a master lease agreement that assigns City Hall and the Spring Lane leasehold to a to-be-formed Local Building Authority (LBA) and authorizes lease-revenue bonds of up to $11,500,000.
City attorneys and bond counsel described the structure as a statutory financing mechanism in which the city leases the property to the LBA and the LBA subleases it back to the city. Counsel said the construct lets the city issue annual-appropriation lease-revenue bonds without classifying the borrowing as general-obligation debt that would otherwise require a public election. "So pursuant to a ground lease ... the city leases the existing ground and buildings to the local building authority, and then the local building authority then leases that back to the city," a counsel adviser explained to the council.
Council members asked how ownership and security would operate under the arrangement. A bond adviser said the bondholders' security is the building and leasehold; if the city stopped making annual lease payments, a trustee for bondholders could seize the property. "Should you keep making them just like you kept making your mortgage payments on your home, then you get it back in your full possession," the adviser said.
Council member (unnamed) moved approval of Resolution 2025-24, authorizing execution and delivery of the master lease and the issuance and sale of lease-revenue bonds not to exceed $11,500,000; the motion carried on a roll-call vote with Council member Gray, Council member Quinn, Council member Fotheringham, Council member Durham and the mayor recorded as voting in favor.
The council also discussed how the structure preserves funding flexibility — for example, not pledging sales tax to the bonds so that sales tax capacity is available for other priorities — even if it could lead to slightly higher financing costs. Next steps include finalizing LBA formation documents and taking remaining LBA-specific agenda items in the reconvened LBA meeting.
The resolution was approved at the Sept. 18 meeting; the LBA will present detailed financing documents at subsequent meetings.
