6.1 Debt Financing Options DiscussionCITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
03/14/2022/2021 4:00 P.M.
AGENDA SECTION
NO:
ITEM
NO:
Page 1
ITEM:
Debt financing options discussion.
BACKGROUND:
ORIGINATING DEPARTMENT:
Finance & Administration
BY: Debbie Pack, Director
FISCAL APPROVAL:
BY:
FINAL
BY:
The City of Salina annually issues General Obligation Temporary Notes for capital projects as
temporary financing when projects begin, then issues permanent General Obligation bonds to fund the
projects once they are complete and final cost is known.
The City was anticipating issuing temporary notes in 2022 for the following projects as approved in the
2022-2026 Capital Improvement Plan on January 3, 2022. These notes would mature on May 1, 2023.
Project
2022 Approved Amount Funding Source
Fire Station #4 - Design
$ 500,000 Pro ert Tax
Sanitation Truck Building
$ 375,000 Sanitation Fees
Baseball Im rovements2
500 000 Transient Guest Tax
Total
$ 3,375,000
The City currently has fund balances available to temporarily fund these projects with existing cash to
avoid interest of approximately $33,750 and issuance costs of approximately $35,000. This would
save the City approximately $68,750 on these projects which, if financed through temporary notes,
would have been added to the permanent financing (bonds) and been paid with interest over the life
of the bonds.
The City's current overnight sweep account has a balance of over $60 million. The minimum required
balance in this account is $10 million. The interest earned on this account is .02%. Funds from the
sweep account could be used to temporarily fund projects and avoid the need for temporary notes.
The net savings accounting for the avoidance of issuance costs and temporary note debt, as well as,
foregone interest earnings on the sweep account is estimated to be $67,000.
Staff is recommending funding this year's projects with $3,375,000 available in the sweep account.
If the City Commission agrees, staff will be presenting debt financing on March 21, 2022, for the
issuance of General Obligation Bonds only. If City Commission directs staff to fund these projects with
temporary notes, staff will bring action to sell both notes and bonds to the City Commission on March
21, 2022.
AGENDA SECTION
NO:
ITEM
NO:
Page 2
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
03/14/2022/2021 4:00 P.M.
ORIGINATING DEPARTMENT:
Finance & Administration
BY: Debbie Pack, Director
FISCAL APPROVAL:
BY:
FI NAL APPROVAL:
BY:
The City could save approximately $68,000 by temporarily funding projects out of cash. The lost
interest revenue on the sweep account would be approximately $675, netting the City a possible
savings of $67,000.
COMMISSION ACTION:
Staff is asking for direction on the City Commission's desire to fund the projects currently slated for
temporary note financing with cash until 2023, when they will be permanently funded with General
Obligation Bonds.