This upcoming year the Town faces some serious financial challenges. The Town Center bond begins its balloon payments plus the real possibility of another $25,000 homestead exemption. According to projections, the additional homestead exemption will reduce our ad-valorem revenues by $300,000.

The Build America Bond for the Government Center Project is collateralized by the Electric Utility Tax Revenues and are due serially beginning December 1, 2019 through the year 2040 with semi-annual interest due on June 1 and December 1 each year. This bond bears interest rates ranging from 7.05% to 7.627% which translates, to an effective rate of 4.57% to 4.96% after the federal direct share of interest (FDSI).

At this current moment we are only paying interest on this bond of $356,524 net of FDSI. In 2019 we will have to fund an additional $380,000 to pay for the Principal portion. The total bond payment will be $736,524 net of the FDSI.

The Town pledged the Electric Utility Tax revenues as payment for the bond. Between the additional bond payment and potential loss in revenue, we are looking at a $680,000 dollar hit from our current level of service.

I would like to direct staff to research the possibility of refinancing our Build America Bond (BAB) for savings purposes. The BAB program expired in 2010 so we cannot refinance using a new BAB. However, our bond can be refinanced using a tax-exempt bond which are at a 50 year low. After doing some research, I became aware that we can find substantial savings by refunding our BAB with a tax exempt crossover advance refunding bond. Ultimately, I want to ensure that staff leaves no stone unturned to find long term savings

Fiscal Impact: TBD