Item Coversheet
City of Independence
AGENDA ITEM COVER SHEET
BILL NO. 21-506Ord.No:          19216

Agenda Title:

21-506 - 1R.  An ordinance authorizing the borrowing of not to exceed $45,000,000 from the Missouri Development Finance Board in connection with the refinancing of certain redevelopment costs described in the Crackerneck Creek Tax Increment Financing Plan previously approved by the city; approving the form of and authorizing the execution of certain documents with the Missouri Development Finance Board; providing for the administration of the Crackerneck Creek Special Allocation Fund; prescribing other matters relating thereto; and declaring an emergency.
Recommendations:

Pass Ordinance
Executive Summary:

The outstanding debt related to the Crackerneck Creek Tax Increment District includes significant payment requirements that exceed projected revenues over the next several years. 

 

Staff along with Gilmore Bell as our Bond Counsel and Baker Tilley serving as our Municipal Advisor has worked over the past two years to create a refunding option for the outstanding Crackerneck Creek related debt. In April of 2020, the City engaged Goldman Sachs & Co. as the Underwriter for the debt refunding to further refine the plan and to assist with selling the debt. 

 

The Ordinance authorizes the City to borrow up to $45 million for the purpose of refunding outstanding Series 2006B, Series 2013A, and Series 2013B bonds. The Ordinance further authorizes the officers of the City to execute all documents and take actions to complete the transaction.  The officers of the City are only able to complete the transaction if the results of the sale are within the following parameters:

 

  • The maximum principal amount of the Series 2021 Bonds shall not exceed $45,000,000. 
  • The True Interest Cost of the Series 2021 Bonds shall not exceed 4.25%.
  • The weighted average maturity of the Series 2021 Bonds shall be between 16 years and 21 years.
  • The final maturity date of the Series 2021 Bonds shall be not later than the year 2051.
  • The Underwriter’s discount shall not exceed 1.85% of the principal amount of the Series 2021 Bonds.
  • The Series 2021 Bonds shall be subject to optional redemption prior to maturity beginning not later than September 1, 2031.

 

Background:

The Crackerneck Creek TIF financing includes five outstanding debt issues.

 

Working together, the financing team has developed a long-term plan to make Crackerneck Creek related debt service payments. This can be accomplished by refunding the Series 2006B; 2013A; and 2013B bonds, and implementing the TIF Supplemental Appropriation Fund Policy previously adopted by the City. When the City's TIF projects reach the end of their life, the City portion of the increment will be deposited into the Supplemental Appropriation Fund in amounts – together with pledged project revenues – necessary to make debt service payments on TIF related obligations. The City will use this Fund to appropriate for Crackerneck Creek and other TIF district shortfalls. This approach provides for proactive, planned appropriates while giving the purchasers of City debt more confidence debt payments will be made. 

 

The refunding debt will be a long-term obligation of the City and considered a debt security. The financing team has developed the Preliminary Official Statement (POS). The POS is the document used by the issuer to give information about the price of the bond, the maturity date, interest rate, and all other important information to potential buyers. 

The City is responsible for including information within the POS that reasonable investors would consider to be important in making an investment decision. This information includes relevant financial and operating information as well as legal and tax considerations. The POS includes how the City plans to repay the debt. 

As part of the transaction, the City will be making disclosers in compliance with the antifraud provisions of the Securities Act of 1933 and Rule 10b-5 of the Securities Act of 1934.  Primary market disclosure practices for municipal securities have developed as a result of these antifraud provisions, federal regulation of broker-dealers through the Securities and Exchange Commission (SEC) Rule 15(c)2-12, and other regulations of market participants by the Municipal Securities Rulemaking Board (MSRB).

The governing body is urged to review the POS and be aware that Federal antifraud laws prohibit making material misstatements or omissions of material facts if those facts are necessary to avoid a misleading statement. If the City fails to comply with these disclosure requirements the City may be subject to regulatory actions and/or monetary fines.

 

 

Emergency Justification:

The sale of the new bonds will occur the first week of June.  Approval of this item in one reading is needed to ensure materials are finalized and produced timely. 


Fiscal Impact:

Pledged revenues generated within the Crackerneck Creek Redevelopment Area are currently projected to be insufficient to pay related debt service. When the outstanding debt was issued, the City pledged to appropriate funds including from the General Fund to pay any shortfall in debt service.  

 

The primary purpose of refunding the debt associated with Crackerneck Creek is to structure a repayment plan that lessens the chance that a general fund appropriation would be required.



Department:          Finance and AdministrationContact Person:          Bryan Kidney


REVIEWERS:
DepartmentAction
Finance DepartmentApproved
Finance DepartmentApproved
City Managers OfficeApproved
City Clerk DepartmentApproved

Council Action:          Council Action:         

ATTACHMENTS:
DescriptionType
Ordinance Crackerneck Creek FinancingOrdinance
Preliminary Official StatementBackup Material