Lifetime Citizen Portal Access — AI Briefings, Alerts & Unlimited Follows
Delaware City Council approves emergency borrowing to refund notes, fund fire and road projects
Loading...
Summary
Council approved emergency ordinances authorizing up to $11.7 million in notes and up to $20.25 million in bonds to refund short-term debt and finance fire-safety and transportation projects; municipal advisor David Connolly and finance staff explained timing, interest-rate caps and funding sources.
Delaware City Council on Feb. 9 approved two emergency ordinances that authorize the city to issue short- and long-term debt to refinance prior notes and fund public-safety and transportation projects.
The council passed Ordinance 26-04, authorizing the issuance and sale of notes in an aggregate principal amount not to exceed $11,700,000 to refund certain securities issued for roadway improvements, and Ordinance 26-05, authorizing bonds in a maximum aggregate principal amount of $20,250,000 to pay costs for fire-safety facilities and municipal transportation. Both measures were declared emergency ordinances and were adopted after the council suspended the three-reading rule so the legislation could take effect immediately.
The finance director (recorded in the meeting as saying, "I, Felicia Balone") and municipal advisor David Connolly of Rock Mill Financial Consulting presented the financial rationale to council. Connolly said the city—s long-term financing window currently makes it advantageous to convert portions of short-term note debt into 20-year bonds and to secure favorable market rates.
"We're looking at interest rates of about 4% for the long-term financing," Connolly said, noting the city—s AA1 credit rating and the benefit of locking in rates now rather than waiting. He also explained an IRS-related concern: when two securities are sold within 15 days of one another, the IRS treats them for arbitrage purposes as a single financing, which can affect the yield calculation and how much interest earnings the city may retain.
Council members pressed staff and the advisor on ordinance language that lists an "estimated" bond rate of 6%. One member asked whether the text should instead set a cap ("not to exceed" a specified percentage) or use a market-based phrase so the city does not have to restart the legislative process if the final rate differs slightly from the estimate. Connolly said the 'not to exceed' approach has been used historically to give staff authority to accept the final rate on behalf of council without repeating readings, and that staff would return to council with updated numbers before the actual sale when markets are clearer.
Finance staff explained project-level funding sources: Sawmill Parkway and Merrick Boulevard are expected to be covered in part by TIF revenues and contract outcomes; a fire station project will be funded in part by the fire levy and impact fees, with limited general-fund exposure. "A lot of these have secondary funding sources, and the true general-fund impact is very minimal," the finance presenter told council.
Council voted to suspend readings, adopt emergency clauses and pass both ordinances on the night they were introduced. The council record shows the motions carried by roll call following discussion and the presentation from the municipal advisor.
Next steps: staff will proceed with the financing process, prepare for the upcoming credit-rating presentation in March, and return to the council with final pricing and documents ahead of security sales so council can review the exact terms before staff accepts final interest rates.
