The Finance Committee met 08/07/2023. They received a presentation from Appleton’s Baird representative Brad Viegut on the sale of $20.2 million of general obligation promissory notes. They then unanimously voted to recommend that the sale of those promissory notes be approved.
I’ve prepared a transcript of the discussion for download.
Although $20.2 million in obligations/debt is, in some respects a lot, the presentation and the request were routine so did not take up much time. Mr. Viegut ran through the timeline of the process. If the Finance Committee approved the request to move forward with the sale of the promissory notes, preparations would be made for the sale. Baird would secure a rating from Moody’s Investors Services and proceed to market the note to investors nationwide. Mr. Viegut would then present the final interest rates and results of the offering at a special Finance Committee meeting on 08/16/2023. The full Common Council would also vote on the item on 08/16/2023. Closing would take place 09/06/2023 which was the date the funds would be wired to the city’s accounts.
The general obligation note issue size was $20,200,000. Mr. Viegut explained it was secured by the city’s authority to levy taxes. Items covered by the funds generated were:
- Typical capital improvement program projects.
- The second phase of library financing.
- TID 11 infrastructure projects.
The repayment timeframe spanned ten years, starting in April 2023. For purposes of the presentation, he estimated the interest rate at 3.75%, which he believed was a conservative estimate that allowed for potential fluctuations.
Mr. Viegut presented an example financing plan, illustrating how the debt service payments would be supported by tax levy. He noted that repayment of TID 11’s portion of the $20.2 million would be funded by revenues from the TID. He also showed the 10-year debt service allocation allocations for capital improvements, the library, and TID projects, extending to 2033.
He also briefly reviewed the city’s forward-looking capital improvement program so that they could have a good understanding about the implications of future debt costs. There were three potential projects in the future that would be significant one-time infrastructure improvements, but overall, they had gotten to a point where the city’s debt service (principal and interest payments) had plateaued, and they projected it would start moving downward in the future.
There were only a couple questions from the committee members. Alderperson Denise Fenton (District 6) inquired about a discrepancy in the total amount, which was explained as rounding for issuance in $5,000 increments. Alderperson Sheri Hartzheim (District 13) questioned the interest rate, and Mr. Viegut explains that while it’s conservative at 3.75%, current rates could potentially be lower. He also explained that while a rate of 3.75% looked pretty high when only looking at rates for the last 10 years, it was a good rate when looking back over a 30-year timeframe.
The committee voted unanimously to approve the sale of $20.2 million general obligation promissory notes.
View full meeting details and video here: https://cityofappleton.legistar.com/MeetingDetail.aspx?ID=1114878&GUID=63600719-60C4-4F3C-9084-3E21F212D41D
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