Financing Options for Fire Station #1
Expansion & other Facility Improvements
City Council Meeting
August 15, 2023
Financing Options Agenda
• Background
• Options for Financing Fire Station & Other Facility
Improvements
• Request Direction from City Council
Background
• $6 million identified for the Fire Station #1 Expansion Project with no funding source in the FY 2023/2024 Budget • Significant additional capital costs anticipated from facilities condition assessment results due to deferred maintenance on older facilities
• June 20, 2023 City Council meeting – the City Council requested staff to bring an update on options for funding these projects back to the City Council in 8 weeks
• Today we present the preliminary research and options identified to date
Bank Loan for Fire Station #1
• Secure Bank Loan of $6 million
o Fire Station #1 Expansion Project has a more immediate need, defined scope, and project ready to begin
o Additional time needed for the facility condition assessment results • Bank loans typically range from 5-10 years
• Slightly higher interest rate
o Fed Funds Rate is 5.25% - 5.5%, private bank loans are currently higher than historical rates
• Lower cost of issuance, less administrative requirements • Bank loan obtainable more quickly
Revenue Bond Issuance
• Revenue bond issuance utilizing findings from facility condition assessment
o Revenue bonds do not require voter approval
o This will require more time until the assessment is complete o Will also require prioritizing facility needs & development of project scopes • Bond issuance terms may range up to 30 years
• Lower interest rate than private bank loans
o Based on securities market, term of issuance, and size of bond • Higher cost of issuance & increased administrative
requirements
o Compliance with securities laws, continuing disclosures, etc.
Other Considerations
• General obligation bonds – require 2/3 voter approval • Take two-pronged approach
– Secure Bank Loan of $6 million for Fire Station #1 Project o Refinance into the revenue bond issuance later
– Then wait for completion of the facilities condition
assessment to determine size of bond necessary
o Provide time to work with financial advisors to develop more strategic plan to fund facilities
• Search for grant funding available
Next Steps
• Staff seeks direction from your City Council
based on the presentation today
• Staff recommends bringing back more
information based on City Council direction
Questions
• Questions?