Submitted by: Ron Brooks
Submitting Department: Finance
Agenda Section: Action
Item Title:
title
Hyattsville Ordinance 2022-03: Authorizing the Issue and Sell of General Obligation Bond Anticipation Notes (INTRODUCTION & FIRST READING)
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Suggested Action:
recommendation
I move that the Mayor and Council introduce Hyattsville Ordinance 2022-03 authorizing and empowering City of Hyattsville to issue and sell from time to time one or more series of (1) general obligation bonds in an aggregate principal amount NOT to exceed Eleven Million Two Hundred Fifty Thousand Dollars ($11,250,000), and (2) general obligation bond anticipation notes in an aggregate principal amount not to exceed Eleven Million Dollars ($11,000,000), and (3) general obligation refunding bonds provided that the aggregate principal amount of any series of refunding bonds shall not exceed one hundred thirty percent (130%) of the aggregate principal amount of the bonds refunded therefrom. The ordinance requires the proceeds of the sale of the bonds to be used and applied for the public purpose of financing, reimbursing or refinancing costs of the project identified as 3505 Hamilton Street Public Safety Building, together with related costs; specifies the amount of the bonds and the bond anticipation notes to be allocated to the project, provides that each series of the authorized bonds, bond anticipation notes and refunding bonds may be sold at public sale or private sale; authorizes the City Council to determine or provide by resolution for various matters relating to the authorization, sale, security, issuance, delivery, payment, and redemption or repayment of and for each series of bonds; City pledges its full faith and credit and unlimited taxing power to the payment of debt service on the bonds and provides for the imposition of ad valorem taxes sufficient for such purposes. Details of any series of the bonds to be issued shall be determined or provided for by resolution of the City Council.
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Summary Background:
In 2019 the City issued bonds in the amount of $12,675,000 to fund improvements to the DPW facility and the renovation of 3505 Hamilton Street to become the new public safety building. Construction of the DPW facility began in late Fall 2019. The 3505 Hamilton Street construction project was anticipated to be solicited in 2020 with work beginning in late 2020. However, due to the COVID-19 pandemic the process to complete the design, review, and permitting for the 3505 Hamilton Street project was significantly slowed down and delayed. The solicitation process began in mid-2021, with the permits not being issued by Prince George's County until early 2022. The solicitation process was completed in Spring 2022 with Council approving a contract with Whiting-Turner in April 2022 in an amount not to exceed $18.7M. Unfortunately, the pandemic created significant delays in the production, shipping, and availability of most building materials, including a shortage of available workforce. These issues combined, caused price increases anywhere from 15% to 200% or more of pre-pandemic prices, which were used to create the initial estimates and amounts for the 2019 bond issuance. As a result, the 3505 Hamilton Street project now has a funding shortfall of $10.6M and the administration is asking Council to fund this by approving the issuance of General Obligation Bonds Anticipation Notes (BANs) in the aggregate principal amount of $11,250,000 that includes $650K for the costs of issuance, interest on the BANs and related costs. Additionally, in an effort to help reduce the costs for this project, the City has been awarded $500k in bond bill funding and anticipate requesting additional grant dollars in the next round of funding through our State Delegates and the Governor’s capital budget.
Next Steps:
Upon final Council approval to issue BANs bond underwriters will secure funding.
Fiscal Impact:
The City’s Annual Debt Service payments will increase approximately 10.8% a year.
City Administrator Comments:
Recommends approval.
Community Engagement:
N/A
Strategic Goals:
Goal 3 - Promote a Safe and Vibrant Community
Legal Review Required?
Complete