Fiscal Note
This is an initial resolution to issue 20-year bonds for two major projects included in the 2021 adopted capital budget -- the second and third phases of a multi-year update to the Metro Transit bus storage and maintenance facility at 1101 East Washington Avenue, and the purchase and remodel of a Metro Transit satellite bus storage and maintenance facility on Hanson Road. Up to a total of $17,805,000 will be issued for these projects, including the estimated cost of issuance.
The total estimated cost of the projects, along with the borrowing plan for each, is described below:
Metro Transit Bus Storage and Maintenance Facility Update -- $37 million total cost of all phases -- currently in Phases 2 and 3 ($5.5 million was borrowed in 2020; $11.8 million will be borrowed in 2021)
Metro Transit Satellite Bus Storage and Maintenance Facility Purchase and Remodel -- $24 million -- $13 million GO Borrowing and $11 million federal funds ($6 million will be borrowed in 2021)
Due to the relatively large cost impact and useful life of these projects, along with the overall amount of borrowing in 2021 due to major facilities construction and renovation projects, these bonds will be issued with a 20 year repayment period. Debt service on $17,805,000 is anticipated to average approximately $1.1 million annually. This compares with estimated average annual debt service of $2.0 million annually for 10 year promissory notes. Interest costs on 20 year bonds are estimated to total $3.9 million, compared with $2.5 million for 10 year notes. The debt service and interest cost estimates are based on current interest rates on AAA-rated municipal debt and the City’s practice of repaying debt on a level-principal basis. "Level-Principal" means that an equal amount of principal is paid each year (e.g., 10% of principal for 10 year notes; 5% of principal for 20 year bonds), which results in less interest paid compared to a "level-debt service" approach.
The bonds ref...
Click here for full text