Submitted by: Ron Brooks
Submitting Department: Finance
Agenda Section: Action
Item Title:
title
Hyattsville Resolution 2024-01: Authorizing the Issue and Sell of General Obligation Bonds (INTRODUCTION & ADOPTION)
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Suggested Action:
recommendation
I move that the Mayor and Council introduce and adopt Hyattsville Resolution 2024-01, A resolution of the City Council of the City of Hyattsville (the "City") authorizing the issuance and sale of a series of the City's general obligation bonds pursuant to the authority described herein, such bonds to be designated "City of Hyattsville General Obligation Public Improvement Bonds" (the "Bonds") and to be issued in an original aggregate principal amount not exceeding $17,500,000, subject to the further provisions of this resolution.
The proceeds of the sale of the bonds are to be used and applied for the public purpose of permanently financing or reimbursing costs (as defined herein) of the project identified herein as 3505 Hamilton Street Public Safety Building, together with related costs, including costs of issuance; prescribing the form and tenor of the bonds and certain terms and conditions for the issuance and sale thereof at private sale through a negotiated underwriting or private placement with Mesirow Financial, Inc. (the "Underwriter") and other details incident to the issuance, sale, and delivery of the bonds; authorizing the negotiation, execution, and delivery of a bond purchase agreement or private placement agreement with the Underwriter; providing for adjustments in the preliminary maturity and amortization schedule for the bonds provided for herein and authorizing the Mayor to determine and fix certain terms and details in connection with the sale of the bonds; authorizing the preparation, completion, and distribution of a preliminary and a final official statement, limited offering memorandum, or a private placement memorandum in connection with the sale of the bonds; designating a bond registrar and paying agent and determining or providing for certain matters relating to such engagement; providing for the appropriation, disbursement, and investment of the proceeds of the bonds; providing for the imposition and collection of taxes necessary for the prompt payment of the principal of and interest on the bonds; providing that the full faith and credit and unlimited taxing power of the City shall be pledged to the payment of such principal and interest; providing that the principal of and interest on the bonds also may be paid from any other sources of revenue lawfully available to the City for such purpose; making or providing for certain covenants and determinations relating to the tax-exempt status of the bonds; authorizing the approval, execution, and delivery of a continuing disclosure undertaking pursuant to Securities and Exchange Commission Rule 15c2-12 and covenanting to provide continuing disclosure relating to the bonds, to the extent required; designating a dissemination agent and determining or providing for certain matters relating to such engagement; designating bond counsel in connection with the issuance and delivery of the bonds; providing that the provisions of this resolution shall be liberally construed; and generally relating to the issuance, sale, delivery, and payment of and for the bonds (INTRODUCTION & ADOPTION).
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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 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 project 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 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 of the significant delays, the 3505 Hamilton Street project had a funding shortfall of $10.6M and the administration asked 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 included $650K for the costs of issuance, interest on the BAN’s and related costs.
The administration is now seeking approval by Council to issue and sale General Obligation Bonds in an amount not to exceed of $17.5 million including the costs of issuance for the purpose of permanently financing and reimbursing costs of the project 3505 Hamilton Street the Public Safety Building.
The resolution pledges the City’s full faith and credit and unlimited taxing power to pay debt service on the General Obligation Bonds and provide for the imposition of ad valorem taxes sufficient for such purposes.
Next Steps:
Upon final Council approval to issue General Obligation Bonds underwriter will sell bonds to secure funding to retire the previously issued BANS and pay for other related costs to complete the project 3505 Hamilton Street the Public Safety Building.
Fiscal Impact:
The City’s annual debt service payments will increase significantly.
City Administrator Comments:
Recommend approval.
Community Engagement:
N/A
Strategic Goals:
Goal 3 - Promote a Safe and Vibrant Community
Legal Review Required?
Complete