Michael McBryde from Stephens Public Finance approached the Blytheville City Council’s Finance Committee earlier this week about two separate construction bond issues. The first concerned the Wastewater Construction bonds for the new treatment plant construction. The second dealt with the potential of the city to use Stephens rather than continue with USDA for the Arkansas sales and use tax bonds for the Justice Complex.
Concerning the wastewater bonds, McBryde provided a small handout that stated, "the option shown below generates the maximum construction amount while still maintaining the City under the annual $10 million ‘small-issuer’ cap. This preliminary 30 year structure will be the first issuance in a series of bonds to obtain the required capital and maintain the lowest interest rate for the City. Additional structures and construction amounts can be generated at the City's request. We have also included a preliminary timeline to show the sequence of events for the City of issue these bonds."
The handout predicts that the estimated amount to be $7,300,000 with an estimated average interest rate of 3.97 percent. The estimated average annual payment is predicted to be $417,000.
The preliminary timeline mentioned above predicts that if the council adopts a resolution prepared by Stephens to proceed with sales and use tax financing, then the city would have to complete and receive their annual audit in May. After the audit was received then bid estimates and needs analysis of the system could be finalized by the engineer by September. Once that was done the first draft of the Preliminary Official Statement could be drafted around September 18 and finalized by October 4. Bonds would be offered for sale by October 15 and by November 19 the bond issue could be closed.
Concerning the Justice Complex, the handout states, "The Option shown below generates the requested $2.4 million in construction funds to complete the City's renovations for a new police department building. To accomplish these renovations the City levied a half cent tax in 2017 for public safety and the repayment of bonds. This tax collects approximately $1.4 million annually and will sunset in September 2027. The preliminary structure shown below, with a 8-year maturity, is a conservative look at the City's minimum annual payment. Additional structures and construction amounts can be generated at the City's request. The annual payment can be altered to best fit the needs of the city."
The handout predicts that the estimated amount will be $2,630,000 with an estimated average interest rate of three percent. The estimated average annual payment is predicted to be $377,321.88.
The second handout also includes a preliminary timeline that states if the City Council adopts the resolution to proceed with sales and use tax financing on February 19, then the Friday Firm could begin the first draft of the Preliminary Official Statement and finalize it by March 11. On March 18, the city and Stephens would meet to discuss bond pricing and bonds would be offered for sale on the next day. Bonds would be closed on April 30.