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City’s bonds are going to market
This Thursday, the City of Sequim expects the municipal bonds for its civic center to go on the market.
City councilors made the final call Monday night to approve sale of up to $11 million of limited tax general obligation bonds.
Steve Burkett, city manager, said it’s been two or more years of planning for this week.
Today, Wednesday, July 24, the city will consult on the pricing points before going to market on Thursday.
Attorney Alice Ostdiek, who coordinates bond counseling with municipal agencies for Foster Pepper in Seattle, said if there is an unforeseen issue with the market, the bond can come back within a year to the market for better pricing.
Mayor Pro-tem Ted Miller expressed concern about the pricing pressures on one day, but Elray Konkel, the city’s administrative services director, reassured him that at least eight people with the law firm will be working specifically on this to protect the bonds on the city’s behalf.
Miller said he spoke with the bonds’ underwriters, D.A. Davidson & Co. of Port Angeles, and there’s been a lot of interest about the bonds.
The $11 million or less in bonds will pay for the civic center along with $2.5 million from general government funds — including the public safety tax funds — and $2.5 million from utilities, with the project estimated at between $15 million and $15.5 million.
Sequim looks to pay back the bonds at the rate of up to $660,000 a year over 30 years.
To make this payment annually, Konkel said, the city can draw on savings of $200,000 in rent, $225,000 from the public safety tax, $75,000 from the real estate excise tax and $160,000 from the general fund.
This final amount makes up about 2 percent of the general fund. “We’re confident we can maintain that budget beyond 2014,” Konkel said.
He anticipates having the financials determined for the city’s reimbursement of the bonds by the end of the week.
City receives high bond rating
Last week, city officials flew to San Francisco, Calif., to present for a bond rating with credit rating agency Standard and Poors.
Sequim received an AA- minus bond rating, which Ostdiek said is “remarkable for a city this size.”
Mayor Ken Hays, Police Chief Bill Dickinson, accounting manager Sue Hagener, financial advisor Annette Sommer, Burkett and Konkel led the two-hour presentation on the city’s management structure, financial policies, financial history and current financial status.
Burkett said the extensive analysis and positive rating reaffirm that the city’s conservative financial policies and practices have resulted in a financially stable and healthy position.
“This high rating will allow us to save thousands of dollars over the life of our bond issue,” he said.
“This rating is not only the result of the financial discipline of the city government, but also reflects on the basic financial integrity and stability of the entire community and our residents. I am very proud that the City of Sequim has the highest bond rating of any city on the Olympic Peninsula.”
The city received its rating based on qualitative and quantitative analysis. Some of the quantitative analysis includes ratios of market value per capital, diversity of taxpayers, debt load and household/per capita effective buying income as a percentage of the U.S. level. Some of the qualitative analysis includes an established rainy day fund, capital improvement plan, debt management policy and more.
“This presentation was a tremendous opportunity for us to sell our dream and vision for the project,” Hays said.
While watching the presentation, Hays said he could see the reaction by the analysts as they learned more about Sequim and saw their enthusiasm grow.
“I am very proud of everyone involved and to have been a part of the team,” he said.
So far the city has spent $1.6 million on the project after saving those funds over 10 years. Officials anticipate spending another $3.4 million in cash for completion of the project with a portion of that paid from the utility funds for their portion of the building and the balance from current funds set aside.
Three design-build construction teams were chosen July 15 to submit their designs to the city council.
One of those concepts will be chosen in the fall with construction tentatively set to begin in early 2014 and to be completed in 2015.
For more information on the project, call the City of Sequim at 683-4139.