Pay-as-you-go (cash) orPay-as you-use (debt)?

Which approach is feasible given project costs, fund balances, debt burden, tax rates?

How will decision affect ability to meet existing obligations and complete future projects?

How does bond interest expense compare to project cost inflation if decision is to pay-go?

Which approach is fairer to current and future taxpayers, given project’s useful life?

Project Funding Options

Project costs and timing Plus: Other future financing needs?

Available funds and future revenues

Estimated bond interest rates Also: Investment rates on fund balances

Council / community positions

Parameters: Internal

Authorization in State Law Types of municipal debt Process for approval and issuance

Federal Regulations IRS: Tax-Exempt Uses; Arbitrage Rebate MSRB / SEC: Post-Issuance Compliance

Market Forces Rating Agencies: Credit Quality Investors: Rates, Terms and Conditions

Parameters: External

Given parameters, what are options? Which will deliver funding when needed? Which is affordable: now and in future? Which is good policy and precedent? Which is politically viable?

Result = Project Funding Plan

Project Funding Plans

Estimated Cost: $7.5 Million POST Cash: $2.0 million General Fund Cash: $650,000 G.O. Bond Proceeds: $4.85 million

Two Bond Issues: Tax-Exempt and Taxable

$2.0M POST Cash Uses River restoration / flood mitigation Relocation necessary for River project Park improvements Other POST-eligible uses TBD

Fix the Fork Funding Plan 1

$650,000 General Fund Cash Uses 100% of relocation necessary for Pan & Fork Site (RFCDC-

owned parcel) redevelopment Other private or public uses TBD

$4.85M G.O. Bond Proceed Uses Tax-Exempt: River restoration and other public costs not paid

with POST / GF cash Taxable: Pan & Fork site and RMI site improvements, all

other private development costs not paid with GF cash

Fix the Fork Funding Plan 2

G.O. Bond Ballot Question Authority to issue bonds, pledge full faith and credit and

unlimited property tax ability But Town intends to “cancel” all of authorized debt levy debt

with other revenues, not raise property taxes above existing level

Tax-Exempt / Taxable Bond split is TBD Not part of ballot question, other than estimated cost Town will err toward taxable to fund “gray area” costs as higher interest

cost < cost of IRS audit / penalty

Fix the Fork Funding Plan 3

Repayment of Tax-Exempt Bonds Pay mostly from future POST revenues General taxes for bond portion funding non-POST costs (i.e.

streets / utilities) Plan: offset / reimburse general taxes with Basalt Sanitation District, future

special assessments

Repayment of Taxable Bonds Pay near-term from existing general taxes Use future assessments and development charges / agreements

to reimburse Town and pay off bonds early (if possible)

Fix the Fork Funding Plan 4

Estimated GO Bond amount: $5.0 Million 10 year repayment term (2014 – 2023)

“Worst Case” blended interest rate: 5.00% Current estimated blended rate is 3.00%

“Worst Case” annual debt service: $650,000

Repayment sources: 1% POST sales tax ($1.2 million annually) Existing General taxes (property and 2% sales) External: Basalt Sanitation District, assessments

GO Bond Example

Issuer: Town of Basalt Independent Bond Advisor: Ehlers

Bond Counsel: Kutak Rock Rating Agency: Standard & Poor’s Paying Agent: TBD

Bond Underwriter: TBD Bondholders: TBD

Bond Issuance Participants

Key Pre-Election Steps August 13: Council reviews funding plan and ballot question,

authorizes staff to proceed August 27: Council calls for November 6 election on ballot

question

September 20: TABOR pro/con statements submitted to counties for distribution to voters

September – October: Town mailer, website, other outreach as permitted by state law

October 15: Counties mail ballots to voters

Bond Issuance Process 1

November 5: Election Day

If Voters Approve Question November 12: Council authorizes bond sales November 18: S&P rating call / visit November 26: Competitive bond sales and Council award to

winning bidders Mid-December: Town receives and invests bond proceeds (in

sync with project timeline) Ongoing: Post-issuance compliance

Bond Issuance Process 2

Town Policy: Cash vs. Debt

Fix the Fork Funding Plan

G.O. Bonds: Uses, Debt Service, Participants, Issuance Process

Proposed Ballot Question andKey Steps / Dates

Discussion