Title
A RESOLUTION DESIGNATING THE USE OF A PORTION OF THE SPECIAL AD VALOREM TAX LEVY MADE PURSUANT TO THE AUTHORITY OF K.S.A. 19-101a, Home Rule Resolution No. 221-1987 of the County, and K.S.A. 12-1758, as amended by Charter Resolution No. 48 of the County REGARDING THE ISSUANCE OF REVENUE BONDS BY THE SEDGWICK COUNTY PUBLIC BUILDING COMMISSION TO FINANCE CERTAIN LAND AND BUILDINGS TO BE LEASED TO THE BOARD OF TRUSTEES OF WICHITA STATE UNIVERSITY; MAKING CERTAIN FINDINGS REGARDING OFFERING DOCUMENTS RELATED THERETO; AND AUTHORIZING CERTAIN DOCUMENTS AND ACTIONS RELATING THERETO.
Presented by: Chris Chronis, Chief Financial Officer.
RECOMMENDED ACTION: Approve the Resolution.
Body
Since 1987, pursuant to an Interlocal Agreement executed by the County and Wichita, the County has levied a special 1.5 mill ad valorem tax for Wichita State University. WSU has requested that the BOCC authorize the use of this revenue as security for bonds the University intends to have issued to finance part of the proposed Innovation Campus.
The WSU Board of Trustees has adopted a resolution requesting, provided certain conditions are satisfied, the issuance of up to $72-million of bonds to finance:
1. the construction of an addition to the Woodman Alumni Center that is estimated to cost $1,000,000;
2. demolition of Wheatshocker Apartments and construction on that site of a building to house the University's technology transfer and experiential learning programs, at an estimated cost of $47,000,000;
3. the construction of a portion of a building to house additional facilities for the experiential learning programs, at an estimated cost of $10,000,000;
4. improvements to the University's perimeter road and parking lots at an estimated cost of $2,000,000; and
5. capitalized interest, reserves and transaction costs at an estimated cost of up to $12,000,000.
In the WSU resolution the Board of Trustees asks the Sedgwick County Public Building Commission to issue the bonds for the University, fund the improvements, lease the improvements to the University, and secure the debt with those leases. The University will fund the lease payments with a portion of the 1.5-mill tax levy, should the BOCC take the recommended action and the Wichita City Council take a similar action. The yearly lease payments will equal the PBC's annual principal and interest payment obligations. Sedgwick County will not be a party to the transaction and will have no obligation to repay the debt with any revenue other than proceeds of the special tax levy. Sedgwick County staff and officials will provide administrative support to the Public Building Commission and will be asked to make certain certifications regarding County information that will be included in the offering documents that are disseminated to the investment community.
The bonds may be issued in a single series or in multiple transactions that cumulatively will not exceed $72-million. Some of the bonds will be issued as taxable debt in order to provide maximum discretion to earn revenue from space leases, to employ one or more private businesses to operate the facilities, and to change the use of the buildings during the period when bonds are outstanding. Some portion of the bonds will be issued with a final maturity date as many as 40 years in the future in order to lower the annual cost of debt service. The University estimates that annual principal and interest costs to repay the bonds will be as much as $4.4-million per year for up to 40 years. The precise yearly cost will be a function of the size of the bond issues the length of time until bonds are fully repaid, the mix of taxable and tax-exempt debt that will be issued, the credit rating that is assigned to the debt by one or more bond rating agencies, and the interest rates that are demanded by underwriters in a competitive sale.
The University plans to use a portion of the bond proceeds to pay the yearly interest cost of the bond issues until 2017, when the existing debt to which the 1.5 mill tax levy has been pledged will be fully repaid. At that time, the University proposes to allocate as much of the special tax levy as is necessary to the annual debt service cost of the bond issues.
Alternatives:
The BOCC could decline to approve the Resolution. Insofar as the University Board of Trustees has no revenue stream under it's exclusive control other than the special tax levy, this effectively would preclude the University from proceeding with these elements of the proposed Innovation Campus.
Financial Considerations:
The Resolution imposes no cost on the County and creates no liability. If approved, it would obligate the County to continue imposing at least as much of the special 1.5 mill tax levy as would be necessary each year to pay the debt service on the bonds.
Legal Considerations:
The recommended action is authorized by K.S.A. §19-101a, Home Rule Resolution #221-1987, and K.S.A. §12-1758, as amended by Charter Resolution # 48 of the County.
Policy Considerations: N/A
Outside Attendees: Joe Norton, Gilmore & Bell, PC
Multimedia Presentation: