Title
A RESOLUTION AUTHORIZING AND DIRECTING THE ISSUANCE, SALE AND DELIVERY OF GENERAL OBLIGATION REFUNDING AND IMPROVEMENT BONDS, SERIES A, 2015, OF SEDGWICK COUNTY, KANSAS; PROVIDING FOR THE LEVY AND COLLECTION OF AN ANNUAL TAX FOR THE PURPOSE OF PAYING THE PRINCIPAL OF AND INTEREST ON SAID BONDS AS THEY BECOME DUE; MAKING CERTAIN COVENANTS AND AGREEMENTS TO PROVIDE FOR THE PAYMENT AND SECURITY THEREOF; AND AUTHORIZING CERTAIN OTHER DOCUMENTS AND ACTIONS CONNECTED THEREWITH.
Presented by: Chris Chronis, Chief Financial Officer.
RECOMMENDED ACTION: Adopt the resolution and authorize the Chairman to sign.
Body
The Resolution authorizes the issuance and delivery of general obligation bonds of the County in the principal amount of $13,680,000, and authorizes the Chairman and Chief Financial Officer, in conjunction with Springsted Incorporated, financial advisor, and Gilmore & Bell, P.C., bond counsel, to cause to be prepared such other documents and take such further action as may be necessary to accomplish the sale of the bonds.
The bonds will provide funds to: (a) permanently finance a portion of the costs of the following public improvements previously authorized by the Board, plus costs of issuance:
Project Description Res. No. Authority Cost Estimate
Courthouse Complex -
Acquisition of building for County admin. offices 167-2014 K.S.A. 19-1510/Ch.Res. 56 $7,400,000
Bridge- 183rd St. W. between 47th and 55th St. S. 168-2014 K.S.A. 68-1103 600,000
Bridge- 87th St. S. between 295th and 311th St. W. 168-2014 K.S.A. 68-1103 500,000
Bridge- 45th St. N. between Broadway and Hydraulic 168-2014 K.S.A. 68-1103 600,000
Bike Ped. Bridge on Meridian over WVCFC Project (1) 168-2014 K.S.A. 68-1103 1,500,000
Bridge- 143rd St. E. between 63rd and 71st St. S. (2) 168-2014 K.S.A. 68-1103 690,000
Bridge- 93rd St. N. between Meridian and Seneca 168-2014 K.S.A. 68-1103 300,000
Bridge- 183rd St. W. between Central and 13th St. N. 168-2014 K.S.A. 68-1103 650,000
Bridge- 61st St. N. between 279th and 295th St. W. (3) 168-2014 K.S.A. 68-1103 500,000
Bridge- Hydraulic between 69th and 77th St. N. (4) 168-2014 K.S.A. 68-1103 500,000
Total $13,240,000
(1) $562,000 in GO bonds; and $938,000 in available sales tax funds
(2) $138,000 in GO bonds; and $552,000 in available intergovernmental funds
(3) $400,000 in GO bonds; and $100,000 in available sales tax funds
(4) $250,000 in GO bonds; and $250,000 in available sales tax funds
(b) Refund the following outstanding general obligation bonds of the County (the "Refunded Bonds"):
|
Description |
Series |
Dated Date |
Years |
Amount |
|
G.O. Bonds |
A, 2006 |
1-Dec-06 |
2017 to 2026 |
$2,020,000 |
The bonds to be sold for the Courthouse Complex will be used to reimburse the General Fund for cash used to pay costs incurred to date for the acquisition and related activities undertaken with regard to the building located at 271 W. 3rd Street in Wichita, and to pay the expected costs of renovating and equipping the building for use by MABCD and MAPD. Between now and the scheduled date of the bond sale, the current plans for the building may change. If they do, the size of the bond issue will be reduced as appropriate to finance only the County's expected actual costs.
The County's Financial Advisor estimates that the present value savings that may be achieved as a result of refunding the Refunded Bonds will be approximately $103,000. This estimate is subject to market conditions on the date of the sale of the Bonds.
Alternatives:
The Commission could decline to authorize the sale. This would cause several adverse effects. The proceeds from the improvement bonds are to be used to reimburse County cash accounts that were used to expedite the projects. Failure to proceed with the bond sale will permanently reduce cash reserves and would create substantial unplanned deficits in the General Fund and Highway Fund this year. The refunding bonds will replace annual debt service payment obligations that were assumed in 2006 with less costly obligations made possible by current market conditions.
Financial Considerations:
This financing will add $11.6-million of new debt to the County's balance of outstanding general obligation debt, increasing the total slightly above $137-million.
The new debt is expected to carry a true interest cost of approximately 2.8%. The debt for improvement portion of the bonds will require principal and interest payments for 20 years. The annual repayment obligation is expected to be approximately $900,000 in the first year after the bond sale; it will decrease in subsequent years. Annual repayment is expected to be funded with property taxes and other general revenues; the precise amounts of each will be determined each year in the budget adoption process. The effective property tax rate needed to repay this debt is expected to be less than 0.21-mills. No increase in the County property tax rate will be required by this bond issue
The refunding debt is expected to carry a true interest cost of approximately 2.1%. The refunding is estimated to produce debt service savings having a net present value equal to $135,000, which is 6.4% of the refunded principal. The savings will be realized in reductions of annual debt service that are expected to average $15,000 per year in 2017 - 2026. These estimates are subject to market conditions on the date of the sale of the bonds. The refunding component will be repaid over the remaining life of the 2006 bond issue being refunded.
Legal Considerations:
The Board of County Commissioners previously has authorized the projects to be included in the bonds and has authorized the competitive sale of the bonds. The Resolution provides for the issuance and delivery of the bonds to the underwriter who submits a bid offering the lowest True Interest Cost to the county.
Policy Considerations:
County debt policy provides five ratios that measure the impact of debt on the community. These ratios constitute benchmarks that, in combination, determine the County's debt capacity. The policy specifies that debt will not be incurred if more than two of the five ratios exceed the specified limits. After including the new debt, the county will exceed two of the benchmarks: per capita direct, overlapping and underlying debt; and direct, overlapping and underlying debt as a % of full market value. These two ratios consider the total amount of tax-backed municipal debt that has been issued by any governmental entity that has jurisdiction within Sedgwick County.
Current Debt
Benchmark Policy Limit Current Debt As % Of Limit
Per capita direct debt $500 $270 54%
Per capita direct, overlapping and underlying debt $3,000 $3,894 130%
Direct debt as % of estimated full market value 1.50% 0.42% 28%
Direct, overlapping and underlying debt as % of full market value 6.00% 6.11% 102%
Annual debt service as % of budgeted expenditures 20% 9.63% 48%
As indicated in the ratios listed above, the County's direct debt -- that which has been issued by the county government or its Public Building Commission -- is relatively low, but when added to the outstanding debt issued by cities, school districts, and other special purpose governments within the county, the impact on taxpayers approaches our policy limits.
Outside Attendees: Joe L. Norton, Gilmore & Bell, P.C., Bond Counsel
Multimedia Presentation: N/A