Council reviews audited financials and holds public hearing on proposed $20M bond; hearing closed without comment

At the Jan. 22 meeting, Herriman finance staff presented the city’s audited financial statements for the fiscal year ended June 30 and held a public hearing on parameters for a proposed sales‑and‑franchise‑tax revenue bond.

Kyle (finance staff) told the council the annual audit was completed Dec. 31 and that the auditor issued one compliance finding related to exceeding budgeted expenditures in the police fund, triggered by a lease reconciliation for animal services. Kyle said the city will hire a senior accountant to monitor debt service and interfund activity more closely.

On fund balances, Kyle reported the general fund’s unrestricted fund balance at about $8,000,000 and noted total available fund balances across major funds exceed $30,000,000, which he said equates to roughly 35% of expenses and is above the city’s fund-balance target. Regarding the water fund, staff moved $8,000,000 from capitalized water-rights accounts into the water fund to correct a prior accounting allocation; that reclassification increased the water fund’s unrestricted balance and may affect future rate‑increase needs.

On the proposed bond, staff described a parameters resolution (previously set in December) allowing the city flexibility up to $20,000,000 in principal; Kyle told the council the staff intends to issue roughly $17,000,000 and to structure the bonds for about 20 years (parameters allow up to 30). He summarized three sale methods: competitive sale (usually lowest interest cost but higher issuance cost), negotiated sale (common for the city historically) and direct purchase (lower issuance cost but higher long‑term interest cost). Kyle’s comparison showed an approximate 1.6 percentage‑point difference between competitive and direct approaches that could translate to roughly $80,000 in additional annual debt service and a principal-and-interest estimate near $1,600,000 per year under the presented scenario. Kyle said if market rates fall substantially soon, a direct purchase with an early refinancing could be advantageous; some councilmembers expressed skepticism and preferred a competitive sale to lock in lower long‑term interest costs.

The council opened the required public hearing on the bond parameters; no members of the public spoke or submitted comments and the council moved to close the hearing. Council did not take a subsequent motion to issue bonds at the Jan. 22 meeting; staff said funding would likely be needed by summer for several infrastructure projects and that the city has one to two months to move to market if needed.

Next steps: Staff will return with financing recommendations and likely seek council direction on sale method and timing when market conditions are clearer.