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Township briefed on authority-backed bond plan; ordinance would guarantee up to $26.5 million
Summary
Officials reviewed a guarantee-structure financing that would let the township guarantee authority-issued bonds for a property acquisition, authorizing up to $26.5 million though staff expect about $21.5 million to be borrowed for acquisition plus roughly $1 million for golf-related projects.
Finance advisers told the board the proposal before them is a guarantee ordinance that would allow the authority to issue debt while the township provides a guarantee. "Instead of debt issuance being done by the township, this will be a guarantee ordinance which is essentially like co-signing a loan," the presenter said, explaining that the authority will issue the bonds while the township directs EIT and golf fund revenues to a trustee that will pay debt service.
Presenters emphasized the $26.5 million ceiling is a maximum for market flexibility rather than an expected borrowing amount. "We certainly do not believe we're going to borrow a total of $26.5 million," a presenter said, adding they anticipate borrowing to fund a $21.5 million acquisition and "a million dollars available for the irrigation and other projects of the golf fund." Staff said the $1 million golf portion may need to be issued as taxable debt because of operator/authority arrangements, which would raise borrowing costs into the ~5% range instead of the low-4% they had previously modeled.
Bond counsel Jamie Ferrer of Dinsour and Shaw said the authority will hold title to the property under the planned legal structure and that the transaction will still appear as indebtedness guaranteed by the township. The financing timeline presented calls for finalizing the preliminary official statement, a rating call in the weeks ahead, pricing in early August and funds available by September; bonds are expected to include a seven- to eight-year call feature to allow refinancing if long-term rates fall.
No final vote on the ordinance occurred during the meeting; the ordinance (listed as Ordinance 202608 in the manager’s agenda) was presented for authorization to advertise and further action.
