DATE: February 3, 2015
TO: Board of Mayor and Aldermen
FROM: Eric Stuckey, City Administrator
SUBJECT:
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Consideration of Resolution 2015-13, A Resolution Authorizing the issuance of not to exceed Fifteen Million Dollars ($15,000,000) in aggregate principal amount of general obligation bonds of the city of Franklin Tennessee; making provision for the issuance, sale and payment of said bonds; establishing the terms thereof and the disposition of proceeds therefrom; and providing for the levy of taxes for the payment of principal of, premium, if any, and interest on the bonds. (02/10/15 WS)
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Purpose
The purpose of this memorandum is to provide information to the Franklin Board of Mayor and Aldermen (BOMA) concerning the issuance of a $15 million capital improvements bond issue.
Background
With the adoption of the 2014-2018 Capital Investment Program, the Board recognized the parameters of the debt capacity model prepared by Public Financial Management (PFM), the City's financial advisory firm. Included in the model was the expectation that approximately $15 million in bonds would be required in the fiscal years ending in June 2015 and June 2017. In order to begin the issuance process, an initial resolution is required declaring the intention of the City to issue debt. Resolution 2014-83, incorporating the language necessary to begin the process, was adopted by the Board of Mayor & Aldermen at the December meeting. The resolution was published, as required by Tennessee law, and no comments were received from the public in opposition to the resolution. A final resolution is now required that provides the details of the issue. The Bass, Berry law firm, our regular bond counsel, has prepared Resolution 2015-13 to provide those details. PFM will advise on the date and method of sale, as prescribed in the resolution, in concert with the Mayor and City Administrator.
Financial Impact
The financial impact of issuing these bonds is incorporated in the debt capacity model and the 2014-2018 Capital Investment Program, as amended. The precise numbers that would accrue to annual debt service will be determined by the prevailing interest rates at the time of issuance and the principal repayment structure. At current market rates, the estimated debt service is would be approximately $900,000 per year.
Recommendation
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Staff recommends approval of the initial bond resolution.