HomeMy WebLinkAbout02 AIS facilities financing 7-26-16 AGENDA ITEM SUMMARY
WORK SESSION MEETING DATE: July 26, 2016
AGENDA ITEM TITLE: Facilities Financing Follow-Up
STAFF RESPONSIBLE: Tom Oken and Jon Peacock
SUMMARY OF ISSUE: There are two alternative methods of financing our planned
facilities improvements without raising taxes: sales tax revenue bonds or lease-purchase
certificates of participation (COPs). New information suggests that we should issue
COP's before the November election.
BACKGROUND: At your June 28th work session we discussed the pros and cons of
each financing option:
• The primary advantage to sales tax revenue bonds is their lower cost (potentially
saving $30,000 per year). The disadvantage is that they require voter approval in
November and the ballot question may be misinterpreted as a referendum on the
facility improvements instead of a choice of financing method.
• The primary advantage to COPs is that they do not require voter approval and
consequently could be issued before November if interest rates are forecast to
increase significantly. The disadvantage is the potentially higher cost.
We recently learned that there is now over a billion dollars of Colorado school debt likely
to be approved on the November ballot. Consequently we have been advised to either
issue our financing before the election or wait until March for the huge supply to
clear. Although we probably don't need the funds until March, there is risk that interest
rates may rise enough by then to eliminate the sales tax revenue bond cost advantage.
So we now recommend issuing COP's in October and would like to begin the
process: the first step is to issue an RFP for an underwriter at the end of this month.
LINK TO STRATEGIC PLAN:
Success Factors
• Responsibly maintained and enhanced County assets
• Responsible and accountable stewardship of County assets
• Improved community engagement and participation
KEY DISCUSSION ITEMS: The risk of a 0.2% or greater increase in interest rates on
30-year debt between October, 2016 and March, 2017, since that is the primary cost
advantage to sales tax revenue bonds compared to COP's.
RECOMMENDED BOCC ACTION: Decide whether to have staff proceed with a
COP issue in October.