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Financial adviser outlines $5M certificate of obligation option to fund capital improvements
Summary
Samco Capital Markets presented a plan to issue $5 million in certificates of obligation this year (with potential up to $25 million next year) to fund the capital improvement program while preserving the city's interest-and-sinking tax-rate profile; staff will bring a notice-of-intention resolution in June if the commission wishes to proceed.
City financial adviser Mark McLaney of Samco Capital Markets briefed the Innis City Commission on May 19 about a possible issuance of certificates of obligation to fund the capital improvement program.
McLaney summarized prior borrowings, explained the debt-service model and the goal of maintaining the city’s I&S portion of the tax rate, and showed that an initial $5 million issuance this summer — with a potential larger issuance next year if projects warrant it — could be structured without increasing the I&S tax rate. “We’re not going to borrow money unless you have the projects,” McLaney said, outlining a timetable that included a June 16 staff decision on projects, a notice-of-intention resolution in June, and a possible sale around Aug. 18 if the commission directs staff to proceed.
McLaney said the city has a strong financial position and an AA bond rating that would allow a sale without difficulty, and cautioned that the notice of intention must identify projects for which proceeds would be used; proceeds generally must be tied to the projects listed in the notice or expressly allowed buckets such as “streets” to permit allocation flexibility. Commissioners asked clarifying questions about the notice wording and about tying projects to the notice so that funds can be used where intended.
This item was a presentation; no certificate issuance was approved tonight. Staff recommended that the commission discuss projects in early June so that a notice of intention resolution could be placed on the June 16 agenda if the commission wants to proceed.
