Warsaw Council Approves Parks District Bonds Ordinance On 1st Reading
February 7, 2023 at 11:41 p.m.
Warsaw Council Approves Parks District Bonds Ordinance On 1st Reading
By David [email protected]
Warsaw Community Economic Development Director Jeremy Skinner told the council Monday’s first reading of the ordinance was the Council’s first step in the bond process that the Warsaw Parks Board initiated Jan. 17.
“This is much like any redevelopment bond we would do. You’re going through the same process. The Parks Board, because they’re appointed by you, don’t have the authority by themselves. They need your authority to approve the bonds. There will be a Park Board bond issue that has your two readings that would go forward tonight and at the next council meeting. And then they would meet again in February to approve the final bond issue,” Skinner explained.
He said the bond amount was not to exceed $2.8 million, but would be under that and they’re just advertised high. A public hearing will be held at the Parks Board meeting.
Mayor Joe Thallemer said what the bond will pay for will be the new Parks office and maintenance facility. It’s a BOT (build-operate-transfer) project not to exceed $3.6 million, but the city already has paid down $1.4 million in cash.
“We knew that we were going to hit this point. The idea was that we were going to potentially combine it into one bond with the street department building, but that’s not going to be necessary for at least another year, so I had Baker Tilly do a tax impact (study) and they suggested having the Parks District issue a bond for the $3.6 million minus the $1.4 million is $2.2 million, and there’s about $200,000 in issuance costs,” Thallemer said, adding that the bond will probably be around $2.4 million.
Councilman Jerry Frush said he thought all of this was taken care of six months ago when the council first voted to go ahead with the Parks building.
Thallemer said the building had to be paid for somehow and one option was to go to the bank, which the BOT allows for. “But we found that, and according to Randy (Rompola, bond counsel with Barnes & Thornburg, South Bend), the state legislators made it a lot easier to issue bonds for these type of projects. But the BOT projects, we found that we would save money going to a bond and not paying financing.”
Skinner said the BOT offers an opportunity but that opportunity “comes with a higher interest rate than a bond issue. Where we caught ourselves was, knowing that we had multiple projects, were we going to be able to get one done and then move into the other one.”
He said there’s two things the city could have done: finance the park building project through a bank until the city did the other bond issue, but the parks district bond issue is only for eight years so it just made sense from an interest rate standpoint to just do the bond issue and get a cheaper rate than going straight to a bank.
Councilwoman Cindy Dobbins said, “I guess maybe that’s what confused me a little bit because I was thinking we weren’t going to do this at this time, maybe it was going to be down the road and combined with something else.”
Thallemer said when the city takes possession of the building, which will be in the middle of March, no matter what when the building is transferred to the city, the city has to have the financial arrangements completed. “So, that’s the purpose and there was never any indication it would be any different,” Thallemer said. “I will say that initially I thought it was going to be privately financed. I didn’t anticipate a bond, but at the end of the day the bond is giving us a much-better rate and it’s just a favorable way to go.”
Dobbins asked if this will affect the 2024 taxes. Thallemer said yes and it was probably about 2.5 cents per $100 of assessed valuation for eight years. Combined with the street department building bond, which will be for 20 years, the impact will be about 4.8 cents. Thallemer said the city dropped its tax rate about 6 cents this past year, so even in two years with the 4.8 cents increase, “we’ll still be lower than what our tax rate was last year.”
He said the city can’t pay cash for the buildings, though it bought down about a third of the cost of the parks building with cash. The remainder has to be financed either through a bank or bonds and bonds were the better way to go, he stated.
Councilwoman Diane Quance said the public hearing will be at 5:15 p.m. Feb. 21 in the city council chambers in City Hall during the Parks Board meeting, the day after the Common Council meeting. Clerk-Treasurer Lynne Christiansen then informed the council that the Feb. 20 meeting was moved to 7 p.m. Feb. 21 because of the President Days holiday on Feb. 20.
Thallemer said the public hearing can’t be held on the bonds until they’re approved on second reading by the council. Skinner said the Parks Board meeting might have to be rescheduled, but he also said the Council could have suspended the rules Monday and approve the bonds on second reading. Thallemer said Rompola probably didn’t probably anticipate the Presidents Day holiday on Feb. 20 when he set up the timeline for the bonds. Thallemer said the Parks Board meeting might have to be moved so they can approve the resolution after the council approves the second reading of the bonds.
There was a question about whether the Parks Board meeting and the bonds resolution was already advertised for Feb. 21 and Quance said they were. Skinner said the date and time will have to be readvertised. Thallemer said he would consult with Rompola and figure out the best plan of action.
Councilman Jeff Grose made a motion to approve the ordinance on first reading for the parks district bonds. Council President Jack Wilhite seconded it and the motion was approved 6-0, with councilman Mike Klondaris absent.
Warsaw Community Economic Development Director Jeremy Skinner told the council Monday’s first reading of the ordinance was the Council’s first step in the bond process that the Warsaw Parks Board initiated Jan. 17.
“This is much like any redevelopment bond we would do. You’re going through the same process. The Parks Board, because they’re appointed by you, don’t have the authority by themselves. They need your authority to approve the bonds. There will be a Park Board bond issue that has your two readings that would go forward tonight and at the next council meeting. And then they would meet again in February to approve the final bond issue,” Skinner explained.
He said the bond amount was not to exceed $2.8 million, but would be under that and they’re just advertised high. A public hearing will be held at the Parks Board meeting.
Mayor Joe Thallemer said what the bond will pay for will be the new Parks office and maintenance facility. It’s a BOT (build-operate-transfer) project not to exceed $3.6 million, but the city already has paid down $1.4 million in cash.
“We knew that we were going to hit this point. The idea was that we were going to potentially combine it into one bond with the street department building, but that’s not going to be necessary for at least another year, so I had Baker Tilly do a tax impact (study) and they suggested having the Parks District issue a bond for the $3.6 million minus the $1.4 million is $2.2 million, and there’s about $200,000 in issuance costs,” Thallemer said, adding that the bond will probably be around $2.4 million.
Councilman Jerry Frush said he thought all of this was taken care of six months ago when the council first voted to go ahead with the Parks building.
Thallemer said the building had to be paid for somehow and one option was to go to the bank, which the BOT allows for. “But we found that, and according to Randy (Rompola, bond counsel with Barnes & Thornburg, South Bend), the state legislators made it a lot easier to issue bonds for these type of projects. But the BOT projects, we found that we would save money going to a bond and not paying financing.”
Skinner said the BOT offers an opportunity but that opportunity “comes with a higher interest rate than a bond issue. Where we caught ourselves was, knowing that we had multiple projects, were we going to be able to get one done and then move into the other one.”
He said there’s two things the city could have done: finance the park building project through a bank until the city did the other bond issue, but the parks district bond issue is only for eight years so it just made sense from an interest rate standpoint to just do the bond issue and get a cheaper rate than going straight to a bank.
Councilwoman Cindy Dobbins said, “I guess maybe that’s what confused me a little bit because I was thinking we weren’t going to do this at this time, maybe it was going to be down the road and combined with something else.”
Thallemer said when the city takes possession of the building, which will be in the middle of March, no matter what when the building is transferred to the city, the city has to have the financial arrangements completed. “So, that’s the purpose and there was never any indication it would be any different,” Thallemer said. “I will say that initially I thought it was going to be privately financed. I didn’t anticipate a bond, but at the end of the day the bond is giving us a much-better rate and it’s just a favorable way to go.”
Dobbins asked if this will affect the 2024 taxes. Thallemer said yes and it was probably about 2.5 cents per $100 of assessed valuation for eight years. Combined with the street department building bond, which will be for 20 years, the impact will be about 4.8 cents. Thallemer said the city dropped its tax rate about 6 cents this past year, so even in two years with the 4.8 cents increase, “we’ll still be lower than what our tax rate was last year.”
He said the city can’t pay cash for the buildings, though it bought down about a third of the cost of the parks building with cash. The remainder has to be financed either through a bank or bonds and bonds were the better way to go, he stated.
Councilwoman Diane Quance said the public hearing will be at 5:15 p.m. Feb. 21 in the city council chambers in City Hall during the Parks Board meeting, the day after the Common Council meeting. Clerk-Treasurer Lynne Christiansen then informed the council that the Feb. 20 meeting was moved to 7 p.m. Feb. 21 because of the President Days holiday on Feb. 20.
Thallemer said the public hearing can’t be held on the bonds until they’re approved on second reading by the council. Skinner said the Parks Board meeting might have to be rescheduled, but he also said the Council could have suspended the rules Monday and approve the bonds on second reading. Thallemer said Rompola probably didn’t probably anticipate the Presidents Day holiday on Feb. 20 when he set up the timeline for the bonds. Thallemer said the Parks Board meeting might have to be moved so they can approve the resolution after the council approves the second reading of the bonds.
There was a question about whether the Parks Board meeting and the bonds resolution was already advertised for Feb. 21 and Quance said they were. Skinner said the date and time will have to be readvertised. Thallemer said he would consult with Rompola and figure out the best plan of action.
Councilman Jeff Grose made a motion to approve the ordinance on first reading for the parks district bonds. Council President Jack Wilhite seconded it and the motion was approved 6-0, with councilman Mike Klondaris absent.
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