Broken Arrow City Council
Meeting of: 06/03/2024
Title:
title
Consideration, discussion and possible approval of amended Resolution No. 1582 approving the incurrence of indebtedness by the Broken Arrow Economic Development Authority (the “Authority”) issuing its Sales Tax Revenue Note(s) , Series 2024 in one or more series or subseries (collectively, the “Notes”); providing that the organizational document creating the Authority is subject to the provisions of the Indenture authorizing the issuance of said Notes; waiving competitive bidding with respect to the sale of said Notes and approving the proceedings of the Authority pertaining to the sale of said Notes; approving and authorizing execution of a Sales Tax Agreement by and between the City of Broken Arrow, Oklahoma (the “City”) and the Authority pertaining to a year-to-year pledge of certain sales tax revenues; and containing other provisions relating thereto
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On October 3rd, 2023 Broken Arrow City Council and Broken Arrow Economic Development Authority entered into an Economic Development Agreement with Sunset of Broken Arrow, LLC. The terms and conditions of that Agreement require that the parties to that Agreement take certain actions inclusive of the Authority constructing and completing or causing the construction or completion of the Project Site Improvements. Resolution #1582 authorizes the incurrence of indebtedness by the Broken Arrow Economic Development Authority to fund the required improvements.
The Resolution provides approval of an incurrence of indebtedness not to exceed $26,500,000 per amount of one or more series of Notes, at an interest rate not to exceed 8.0% for a term not to exceed 15 years (June 1, 2039). The exact sizing will be determined and approved by the Chairman (Certificate of Determination) and will also designate the bank or banks purchasing the Notes. The not to exceed sizing is based on a $22 million project fund, preliminarily allocated $7.2 million taxable and $14.8 million tax-exempt, plus capitalized interest through June 1, 2026 (two years) assuming an 8.0% taxable rate and a 6.5% tax-exempt rate, and related costs of issuance. The expectation is that the actual interest rates will be lower and result in a smaller amount of capitalized interest, meaning the aggregate total of the Notes will be something less than $26,500,000; all of this will be finalized prior to closing in mid-June.
The Note will be secured by a pledge of sales tax revenue. It will not include a pledge of the TIF #5 revenues, although our expectation is that will be the actual source of repayment. Based on our not to exceed parameters, and a 12-year repayment term, the maximum annual debt service should be approximately $3,610,000, and less than that based on the actual final interest rates. This amount is significantly less than the projected TIF revenue stream of $4-5 million annually, not including an additional $4 million annually of potential Leverage Act funds.
Cost: $400,000
Funding Source: BAEDA Note Proceeds
Requested By: Cynthia S. Arnold, Finance Director
Approved By: City Manager’s Office
Attachments: Amended Resolution #1582, Public Finance Law Firm Engagement letter
Recommendation:
recommend
Approve and authorize execution of amended Resolution #1582.
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