Item 5G. Authorization to Prepare for Issuance of 2025 General Obligation Bonds
Superintendent's Recommendation:
MOTION TO AUTHORIZE THE CHIEF FINANCIAL OFFICER TO PROCEED WITH THE PREPARATION OF AN OFFICIAL STATEMENT, SET SALE CONDITIONS AND SOLICIT BIDS FOR THE 2025 GENERAL OBLIGATION BONDS IN AN AMOUNT OF $9,325,000.
Prepared By: Shaan Hamilton, Chief Financial Officer and Kelly Grissman, Director of Planning
Background:
On December 19, 2024, the Board of Commissioners approved the 2025 Asset Management Program (AMP) totaling $28,427,851. Staff is recommending $2,000,000 be added to the amount to be financed to replenish the funds available for land acquisition.
The Land Acquisition, Betterment and Development (LADB) Fund is used to pay the Park District's share of land acquisition costs. As we have done in the past, we have used bond proceeds to replenish the balance in this account. The LADB Fund has an available cash balance as of October 1, 2025 of $1,429,491 for future land acquisitions. The LADB has no on-going revenue sources except for interest earnings (which are approximately $40,000 per year). Planning Director Kelly Grissman is estimating that over the next 18 months we will need $1,355,498 for anticipated acquisitions leaving $73,993 available for any new acquisitions; thus we would have almost no money for potential acquisitions until we replenish the fund.
Acquisition activity has increased dramatically in the last two years as higher interest rates have made it more challenging for sellers to find buyers. Staff expects this trend to continue meaning funds could be depleted or acquisition opportunities lost before June of 2027.
The AMP is funded by a variety of sources including Park District bonds, cash on hand and federal, state and local grants. The following is a summary of the funding sources:
The changes in funding are a result of the Park District's Lottery-in-lieu-of collections exceeding the planned amount, reallocating existing funds from prior bond issues to fund a portion of the projects in the 2025 AMP and including an additional $2 million in bonding for land acquisition costs.
The $9,325,000 in bonds will generate $9,510,315 in proceeds to fund project costs since the bonds are expected to sell at a premium (selling above face value) due to the Park District's excellent bond rating and current market conditions. The Park District currently maintains a Aaa rating, the highest rating possible, from Moody's Investor Services. This rating allows the Park District to borrow at the lowest possible interest rate.
In addition to the amount needed for the project costs, the bonds need to fund the cost of issuance, which includes fees to have the bonds rated, the work of our fiscal consultant, bond counsel fees and the underwriter's discount ("profit margin" for reselling bonds to the public).
These fees and charges are estimated to be $68,000. The bonds also include the cost of the first interest payment (capitalized interest) of $297,882, which is due prior to the collection of property taxes in 2026.
The Bonds are recommended to be 26-year bonds in order to maintain an average property tax levy of $675,000 over the life of the bonds. The following is a summary of the proposed Bonds:
The attached "Debt Service Projection Report" shows how this proposed bond issue impacts future debt service tax levies.
The Park District's limit on debt outstanding without voter approval is one-tenth of one percent of the Park District's taxable value, or $185,771,885. Including the proposed Bonds, the total outstanding bonded debt for the Park District will be $63,385,000. The amount of bonds scheduled to be retired during the next five years (including the proposed bonds) is as follows:
These maturities represent 51% of the Park District's outstanding total bonded debt. This is a high percentage and is highlighted as a positive factor each time Moody's rates our bonds.
Next Steps
If the proposed motion is approved, the Board will be presented a resolution awarding the sale of the Bonds at the November 13, 2025, Board meeting. The resolution will award the Bonds to the lowest bidder, set the interest rates and require the Board to levy taxes in 2025 through 2050 to fund annual payments.
Approval of the recommended motion is the first step in the bond process. If approved, the Chief Financial Officer will begin working with the Park District's fiscal advisor and bond counsel to prepare an official statement and solicit bids for the bonds. It is important for Commissioners to understand that the bond market views the issuance of an official statement and receipt of bids as a commitment by the Park District to complete the bond sale. Failure to complete the sale would adversely impact the Park District's ability to issue bonds in the future.
Relationship to the System Plan:
The Request for Action supports the following goal(s) of the System Plan:
Goal 2: Parks Matter
Goal 3: Lead by Example
by financing park improvements as part of a well-planned and managed long-term debt strategy.
Attachments:
