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Council adopts resolution to issue $3.48 million in general obligation bonds, opts to keep 2026 debt levy flat
Summary
The council adopted a resolution providing for the issuance and sale of General Obligation Bonds Series 2025A in the proposed amount of $3,480,000 and agreed with staff recommendation not to capitalize interest, instead using additional projected fund balance to keep the 2026 debt levy flat.
The Brainerd City Council on Sept. 15 adopted a resolution authorizing the issuance and sale of General Obligation Bonds, Series 2025A, in a proposed aggregate principal amount of $3,480,000 to fund planned 2025 construction projects.
Finance Director Connie Hillman outlined the two‑part structure: $1,480,000 of GO improvement bonds (to be repaid with levy dollars and special assessments) and $2,000,000 of GO utility revenue bonds (to be repaid with utility net revenues). Hillman explained that because some projects will be completed in 2025 but not assessed until 2027, staff faced a choice: capitalize interest (an estimated $58,400) or make interest payments now and revisit the preliminary debt levy. Staff recommended not capitalizing interest and instead using a larger projected fund balance to hold the 2026 debt levy flat.
"Staff's recommendation is to not capitalize the interest and use more of the cash balance and I agree with that," said Gabe Johnson, citing a sizeable sinking‑fund cash balance. The council adopted the resolution by roll call; the measure carries the implementation caveat that using fund balance is a short‑term solution that could have future consequences for levy planning.
Next steps: staff will proceed with bond issuance processes and finalize debt levy calculations for the 2026 preliminary levy resolution, incorporating the council’s direction on interest capitalization and use of fund balance.
