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The Prairie Village City Council is considering issuing bonds for public improvement projects throughout the city.
Bond proceeds will be used to accelerate the construction of storm water, street, sidewalk, energy conservation, and park projects currently included in the five-year Capital Infrastructure Program. The proposed bond includes funding for over 20 projects for a total of $9.4 Million.
The City is historically debt averse and fiscally conservative with the last bond issue in 2000 for pool and park improvements. Currently, the City has less than $1 Million in municipal debt. In recent years, the City's capital infrastructure plan has been cash-financed.
The City has a unique window of opportunity to take advantage of the current economic conditions:
- Construction costs have declined.
- Very low borrowing costs. It is anticipated that the city could issue five-year bonds at a rate as low as 2.5% due to the City's strong bond rating and financial performance.
- Competitive design/engineering market as engineering and architectural firms search for projects in the recession.
- Competitive construction bids as contractors search for projects.
- The City has an excellent bond rating - Aa1 from Moody's.
- City's low existing municipal debt ($820k at the end of 2009).
By accelerating the construction timeline for the projects, the residents will realize the benefits of the projects earlier than currently planned. Significant savings in design and construction costs are anticipated and will be used to complete additional projects.
In order to facilitate the issuance of bonds, the City Council approved Charter Ordinance #25 at the recommendation of city staff, bond counsel and the city's financial advisor. This charter ordinance expands the allowable uses of bond financed projects and enables a more efficient and timely issuance to take advantage of current market conditions. In addition, without the charter ordinance, parks projects, as outlined in the Parks Master Plan, could not be included within the bond issue. Similar charter ordinances have been approved by the surrounding communities of Overland Park, Leawood, Lenexa, Olathe and Shawnee.
A majority of bonds will be issued with a five-year payment schedule with the bond payments deriving from the normal allocations to the Capital Infrastructure Program. The repayment schedule will be accomplished without a mill-levy increase as the project costs were already anticipated within the five-year plan using cash-financing.
During the next few months, the City Council will identify the specific projects included within the bond issue. The bond sale is scheduled for late 2009 or early 2010 with project construction occurring in 2010 and 2011.
Additional Information
Charter Ordinance #25
Council Action Item August 3rd
August 3rd Council Committee of the Whole Minutes
August 3rd Council Meeting Minutes
Council Action Item August 17th
5 Year General Obligation Bonds
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