The Mission city council on Wednesday adopted a resolution that authorizes “the offering for sale of special obligation bond tax increment revenue bonds” for the Mission Gateway project, a step laid out in the redevelopment agreement approved by the city more than two years ago.
“As you know, we’ve been working on revisions of the development agreement and taking steps to advance towards the issuance of a special obligation bond that have been contemplated as a part of that redevelopment agreement over the last several months,” City Administrator Laura Smith told the council at Wednesday’s special meeting.
Smith said there has been a lot of work going on behind the scenes to prepare for the authorization to market the bonds: Mayor Ron Appletoft signed an engagement letter with a bond underwriter, D.A. Davidson & Co., and the city selected PGAV as its market study firm.
The progress that’s been made on the special bond issuance has caused the city no financial risk or expense, Smith said. For example, she said the developers escrowed the funds for the market study, which is required to issue a special bond.
Bruce Kimmel, senior municipal advisor at Ehlers, Inc., and Mission’s financial advisor, presented the city council with a five-page document outlining the bond structure. D.A. Davidson has estimated the city can foot a bond issue of $43.5 million with a projected interest rate of 4.5%, Kimmel said. Additionally, he said the current financing will cause the city no financial risk and will minimize potential reputational risks.
“At no point will these [bonds] ever be a liability against the city, or your general taxes and fee revenues,” Kimmel said.
The resolution established the following parameters required for the mayor to “execute a bond purchase agreement,” according to city documents:
- A principal amount no greater than $46 million
- A true interest cost no greater than 5.75%
- A final maturity no later than March 2039
- Purchaser discount no more than 2% of principal amount
The resolution passed unanimously. Appletoft and Councilmember Ken Davis were absent. Councilmember Arcie Rothrock presided over the meeting. The city council will consider a bond ordinance and TIF modifications at the city council meeting on Nov. 18. If both are approved, the D.A. Davidson will be given the greenlight to sell the bonds to investors, Kimmel said.