Title
RESOLUTION REQUESTING THE SEDGWICK COUNTY PUBLIC BUILDING COMMISSION TO PROCEED WITH THE SALE OF REVENUE BONDS FOR THE PURPOSE OF ACQUIRING A PUBLIC BUILDING FROM THE BOARD OF TRUSTEES OF WICHITA STATE UNIVERSITY; DECLARING AN INTENT TO ENTER INTO A LEASE WITH THE SEDGWICK COUNTY PUBLIC BUILDING COMMISSION AND A SUBLEASE WITH THE WICHITA STATE UNIVERSITY BOARD OF TRUSTEES RELATING TO SAID REVENUE BONDS; AND MAKING CERTAIN FINDINGS REGARDING OFFERING DOCUMENTS RELATED THERETO.
Presented by: Chris Chronis, Chief Financial Officer.
RECOMMENDED ACTION: Adopt the resolution.
Body
The Resolution deems it advisable to acquire the Woodman Alumni Center (the "Project"), a public building owned by the Board of Trustees of Wichita State University (the "Trustees") and requests the Sedgwick County Public Building Commission (the "PBC") to sell up to $6,100,000 of PBC revenue bonds (the "PBC Bonds") to pay the costs of the Project and related reserves and financing costs. In order to facilitate the financing of the Project, Sedgwick County, Kansas (the "County") will need to enter into the following leases: (a) a Lease Agreement with the PBC (the "Lease") whereby the PBC agrees to acquire the Project and lease the same to the County for rentals sufficient to repay the PBC Bonds and upon such other terms and conditions set forth in the Lease; and (b) a Sublease Agreement with the Trustees (the "Sublease") whereby the County agrees to sublease the Project to the Trustees for the use and operation of the Project for rentals sufficient to pay the County's rental payments under the Lease and upon such other terms and conditions set forth in the Sublease. The Resolution authorizes the County to enter into the Lease and the Sublease provided that the sale of the PBC Bonds meets the following parameters: (a) the debt service requirements on the PBC Bonds are substantially equal in each year; and (b) the true interest cost of the PBC Bonds shall not exceed 2.00%. Additionally, the Resolution designates from the proceeds of the already existing one and one-half mill special ad valorem tax levy made pursuant to K.S.A. 19-101a, Home Rule Resolution No. 221-1987, and K.S.A. 12-1758, as amended by Charter Resolution No. 48, sufficient monies to guaranty the rental under the Sublease entered into in conjunction with the issuance of the PBC Bonds.
The site and existing structure that comprise the Project are owned by Trustees, and such entity will enter into a Base Lease with the PBC in consideration of the PBC financing the Project and leasing the same to the County pursuant to the terms of the Lease whereby the County will provide for the use and operation of the Project and make rental payments to the PBC in amounts sufficient to repay the PBC Bonds and upon such other terms and conditions set forth in the Lease. The County intends to enter into the Sublease with the Trustees to provide for the source of repayment of the PBC Bonds.
The PBC Bonds are scheduled to be sold in late July 2013.
Alternatives:
The Commission could decline to approve the resolution.
Financial Considerations:
The proceeds of the bonds issued by the PBC at the request of the BOCC will be used by the PBC to acquire, via a lease, the usage rights to the Project from the WSU Board of Trustees. The PBC then will, by a lease, transfer those rights to the county for annual rents equal to the PBC's principal and interest payment obligations. Thus, the PBC revenue bonds will be secured by the county's commitment to make lease payments. The county in turn will sublease the Project to the Board of Trustees for annual rents equal to the county's obligation to the PBC. To assure the county receives the requisite amount of rental income each year, the Board of Trustees will authorize the county to withhold the lease payments from the WSU mill levy. Thus, the transaction will have no fiscal impact on the county budget or county taxes.
Legal Considerations:
The Board of County Commissioners (the "Board") under the authority of K.S.A. 12-1757 et seq., as amended by Charter Resolution Nos. 45 and 48 of the County (collectively the "Act"), has heretofore created the PBC. The PBC has full power and authority to issue revenue bonds in order to provide funds for the purpose of paying all or a portion of the costs of the Project. The PBC Bonds shall be revenue bonds of the PBC payable solely and only from rentals received by the PBC under the Lease, pursuant to the Act. The PBC must adopt a resolution accepting the County's request and declaring an intent to issue the PBC Bonds. Before the issuance of the PBC Bonds, the PBC resolution shall be published once a week for two consecutive weeks in the official newspaper of the County, and if within 30 days after the last date of publication of the resolution a petition in opposition to the same, signed by not less than 5% of the electors of the County, is filed with the County Clerk, the Board shall submit the question of the issuance of the PBC Bonds to the voters of the County at an election called for such purpose or at the next general election. Pursuant to the Act, the County may enter into leases with the PBC for up to 50 years. Such leases are exceptions to the Cash-basis and budget laws.
Policy Considerations:
The issuance of bonds by the PBC is subject to the county's debt policy. The policy establishes a limit on the amount of debt the county may have outstanding at any point in time by setting maximum ratios of direct debt per capita and as a percentage of property market value, underlying debt per capita and as a percentage of property market value, and debt service as a percentage of budgeted General and Debt Service Fund expenditures. The policy says that if more than two of the stated maximum ratios are exceeded, additional debt cannot be issued. As is shown in the following table, the issuance of the bonds requested by this resolution falls within the debt capacity established by the policy.
|
Ratio |
Policy maximum |
Estimated Actual 12/31/2013 |
|
Per capita direct debt |
$500 |
$301 |
|
Direct debt as % of full market value |
1.5% |
0.45% |
|
Per capita direct, overlapping & underlying debt |
$3,000 |
$3,365 |
|
Direct, overlapping & underlying debt as % of full market value |
6.0% |
5.06% |
|
Annual debt service as % of budgeted expenditures |
20% |
10.13% |
|
|
|
|
|
Outside Attendees: Garth Herrmann, Gilmore & Bell PC, Bond Counsel.
Multimedia Presentation: