At the General Fund budget workshop on August 29, 2023, the City Council asked staff to bring a discussion item to present options and explain processes and impacts related to a rolling debt program that would provide funds for equipment replacement, public safety equipment, and other small City capital projects or needs. Vince Viaille, Managing Director of Specialized Public Finance, Inc., will be presenting the program and discussing options with the City Council at this meeting.
Note that the city already borrowed and repaid nearly $2 million, mostly for Animal Shelter renovations that are yet to be bid out. Issuance fees and interest totaled $93,000.
Staff left blank the "financial impact" section of the rolling debt program memo in the background packet.
City staff said no invoices existed for shelter renovations paid from that $2 million borrowing. Council should explore how that initial short-term borrowing was used before committing to future debt issuance.
They have that opportunity tomorrow as a second short term debt instrument of $1.875 million will be presented.
City Council generally avoids cash flow considerations in their annual strategic planning/budget process. The city's various fund balances are not discussed. Some are substantial, having grown from higher property assessments, a multi-year increase in water related fees and other fee increases.
Staff have long taken a minimalist approach with City Council and the wider public.
It took a public information request to get actual costs for the (Series 2023A) notes Council approved. Issuance fees are $49,000, bond counsel fees $3,500 and interest costs $41,327 (as the city shortened the term of the note to August 15, 2023). Those total $93,827, a significant amount that could fund may a low cost spay/neuter surgery program.
I believe those same forces are in play with the series of short term debt instruments.
To date City Council has expressed little curiosity as to the need for the short term notes, the cost of issuance plus interest expense and whether existing fund balances/cash flow can cover the costs of the various projects. That could change tomorrow. Then again, it may not.
Update 9-19-23: City Council endorsed the idea of a rolling debt program as a way of occupying 2 cents of the 11.4 cents tax rate for its interest and sinking fund. Council did not ask about cash flow projections but seemed excited that the city could buy more things within a budget period with this "short-term financing for short-term projects."
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