DATE: February 8, 2019
TO: Board of Mayor and Aldermen
FROM: Eric Stuckey, City Administrator
Kristine Tallent, Assistant City Administrator/Chief Financial Officer
SUBJECT:
Title
Consideration of Resolution 2019-12, An Initial Resolution Authorizing The City To Issue General Obligation Bonds In An Amount Not To Exceed $34,500,000. (2/14/19 FINANCE 4-0, 02/26/19 WS)
Body
Purpose
The purpose of this memo is to provide information to the Franklin Board of Mayor and Aldermen (BOMA) concerning the intent to issue General Obligation Bonds for funding of approved capital projects.
Background
With the adoption of Phase I of the Capital Investment Program, the Board recognized the parameters of the debt capacity model prepared by Public Financial Management, our financial advisory firm. The proposed 2019 Bonds funds capital projects in the areas of road construction, major road resurfacing, police vehicles and fire apparatus and improvements to the sanitation facility. In order to begin the issuance process, an initial resolution is required declaring the intention of the City to issue debt and allow for publication in a newspaper of record.
Financial Impact
The financial impact of issuing these bonds is incorporated in the debt capacity model and Phase I of the Capital Investment Program. The precise numbers that would accrue to annual debt service will be determined by the prevailing interest rates at the time of issuance. At current market rates, the average annual debt service would be $2.3 million per year. Average life of the principal is 10.69 years with final maturity occurring in 2039. The amortization for projects within the issue is tailored to the life of the asset. For example, amortization for funding of the police vehicles is four years.
Recommendation
rec
Staff recommends approval of the initial resolution, as prepared by our bond counsel