City Council Regular Meeting
Return to the Search Page
Return to the Agenda
New Business   Item #: B.
Refinancing of IDA bonds and Issuance of Bond Anticipation Note
Business Meeting: 04/06/2021
With guidance from Davenport & Company, the City's financial advisor, plans have been made to refinance the existing IDA bonds and to issue a bond anticipation note under the City's master lease financing program. This will take advantage of the currently low interest rates and provide funding for Fiscal Year 2022 and Fiscal Year 2023 economic development initiatives. As a result, the annual debt service on the IDA bonds will decrease and the need to budget FY 2022 and FY 2023 economic development activities from unreserved fund balance will be minimized or eliminated.
On Saturday, February 6, 2021, City Council and City staff participated in a planning retreat to discuss utilization of casino revenues and the community's identified priorities. The retreat included a discussion with Davenport & Company, the City's financial advisor, to address the best financial strategy to optimize use of current casino revenue, as well as continued improvement to the City's credit rating.
In lieu of extinguishing the IDA bonds that were used to purchase the Schoolfield site, Davenport recommends refinancing this debt over its remaining life, as well as issuing a bond anticipation note to fund the known economic development initiatives for FY 2022 and FY 2023. This will take advantage of the current low interest rates, reducing the annual debt service on the IDA bonds, and minimizing or eliminating the need to budget use of unreserved fund balance for the next two years. This will be viewed positively by rating agencies and will enable the City to consider enhancing fund balance policy sooner.
The bond anticipation note will have a five-year term at a fixed interest rate. Debt service on the note will be interest only during this term. At any time during the five years, the City has several options. The note can be retired by: payoff with future casino revenues, payoff from fund balance, conversion into traditional long-term general obligation bonds, or any combination of these options. As is customary, City Council will be required to appropriate the proceeds from the bond anticipation note before funds can be spent on approved projects.
In evaluation of this strategy, Davenport assumed the minimum guaranteed casino revenue, along with the City's ample unused debt capacity. Staff has reviewed and supports this recommended financing plan.
It is recommended that City Council approve the attached Resolution to proceed with refinancing the IDA bonds and issuing a bond anticipation note under the City's master lease financing program.
AgendaQuick ©2005 - 2021 Destiny Software Inc. All Rights Reserved.