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Youth Development Center (YDC) Bond / Note Issue
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Executive Summary
The City issued $6.9 million in notes to acquire the YDC property. In September of 2011, the City paid down the note by $2,250,000 leaving a balance of $4,650,000 that will mature September 28, 2012. A decision needs to be made to determine if we will issue bonds to permanently finance the remaining balance or roll the notes forward in anticipation of receiving additional federal funding. Council also needs to decide if it wants to finance the cost of demolition of the YDC buildings.
Legislative History
Ordinance 09-97 approved on September 16, 2009: to issue $6.9 million in notes to purchase the YDC property.
Ordinance 10-112 approved on September 1, 2010: to roll the notes forward.
Ordinance 11-92 approved on August 17, 2012: to roll the notes forward.
Purpose & Explanation
The purpose of the legislation would be to approve the issuance of bonds for the YDC property. The source of funding would be the General Fund ($2,650,000) and Parks Fund ($2,000,000). The City confirmed with bond counsel that issuing bonds would not jeopardize our ability to make use of federal funding to be applied toward the purchase of the property should we receive it at a later date. There would be separate legislation to temporarily finance the cost of demolition of the buildings. The estimated demolition cost is $1,227,000.
City Council has two decisions to make regarding YDC property financing:
Bonds vs. Notes
The following is a summary of options on how to proceed with the $4,650,000 maturing notes issued to purchase the YDC property:
1. Issue $4,650,000 in bonds. The bonds would be repaid by the General Fund ($2,650,000) and the Parks Fund ($2,000,000).
Advantages: The City would take advantage of current interest rates and eliminate the risk of long-term rate increases.
Disadvantages: By permanently financing the property, any future grant funding that would be used to pay off some ...
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