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Brentwood City Commission Agenda

Meeting Date:	01/22/2018
Resolution 2018-08 - A Resolution Authorizing The Issuance Of Not To Exceed $3,500,000 in General Obligation Capital Outlay Notes
Submitted by:	Richard Parker, Finance
Department:	Finance

Information

Subject

Resolution 2018-08 - A RESOLUTION AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $3,500,000 IN GENERAL OBLIGATION CAPITAL OUTLAY NOTES, for adoption

Background

The adopted FY 2018-2023 Capital Improvements Program (CIP) and the FY 2018 annual operating budget originally anticipated a $4,9000,000 general obligation ("G.O.") bond issuance in the fall of calendar 2017 for the Sunset Road/Ragsdale Road intersection project. Upon consideration of the actual FY 2017 year end fund balances, staff’s recommended funding plan in lieu of the $4.9 million 20-year G.O. bonds is to use $1.4 million in unassigned General Fund reserves and issue two 12-year capital outlay notes totaling $3.5 million. A capital outlay note is still a general obligation debt backed by the full faith and credit of the City, but is generally intended for smaller debt issuances. A primary advantage of a capital outlay note is considerably lower cost of issuance compared to bonds, along with greater flexibility in terms of prepayment.

The capital outlay notes would be fixed rate notes with a maximum interest rate of 3.24% and would be issued through an informal bid process via the Tennessee Municipal Bond Fund. The total cost of issuance would be $2,000 and the notes would be eligible for prepayment any time at the City’s discretion. This plan provides the City with much greater flexibility than a 20-year G.O. bond issue, including the ability to pay off the notes early if revenue numbers over the next few years remain stronger than projected in the City's five year financial plan. Also, the notes can be issued without any impact on our long-term Debt Service Fund financial model, meaning there is no required increase in the General Fund's annual transfer to the Debt Service Fund.

At its March 13, 2017 meeting, the Board of Commissioners approved a resolution (Resolution 2017-22) authorizing the reimbursement of certain expenses associated with the intersection project that will be incurred prior to actual issuance of the proposed notes as part of this agenda item. If this resolution is approved, the Tennessee Municipal Bond Fund will handle all required communication with the State Comptroller's Office. It is expected that the notes will be issued within the next six weeks.

Please contact the Finance Director if you have any questions.

Staff Recommendation

Staff recommends approval of the proposed resolution.

Fiscal Impact

Amount :	$3,500,000
Source of Funds:	Debt Service Fund
Account Number:	Fund 211

Fiscal Impact:

Funding is in place in the annual operating budget for the City to make semi-annual interest and principal payments for the notes through the Debt Service Fund.

Attachments
Resolution 2018-08
Signed Resolution