Recreation/Senior Center and Aquatic Center Expansion Task Force Agenda and Packet 2015 12 16

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City„ Louisville COLORADO • SINCE 1878 RECREATION CENTER TASK FORCE COMMUNICATION SUBJECT: DATE: RETIREMENT OF GENERAL OBLIGATION LIBRARY BONDS AND OTHER FINANCING OPPORTUNITIES DECEMBER 16, 2015 PRESENTED BY: KEVIN WATSON, FINANCE DIRECTOR SUMMARY: The Recreation Center Task Force has requested information on possible financing opportunities for the Recreation Center Expansion Project due to the retirement of the General Obligation Library Bonds. In 2003, Louisville voters approved a $7,405,000 general obligation bond issue to finance construction of the new library facility and an increase of up to 1.581 mills in the City's mill levy to pay for debt service (principal and interest) on the bonds. On January 21, 2004, the City issued Limited Tax General Obligation Bonds, Series 2004, in the amount of $7,405,000, at 2.0% - 4.25 %. The initial debt service mill levy was set in 2004 at 1.526 mills and has remained at that level since. Standard & Poor's Rating Services originally rated these bonds at AA -. Standard & Poor's affirmed this rating on December 12, 2007 and then, on March 23, 2011, raised its rating by one notch to AA. On March 25, 2014, Standard & Poor's again raised its rating by one notch to AA +. Rating agencies analyze numerous factors when setting and reassessing municipal bond ratings. During telephone interviews immediately preceding the two rating increases, Standard & Poor's representatives noted the positive reserve balances in the City's General Fund and Debt Service Fund. The Debt Service Fund was established to account for the revenue from the debt service levy and for the payment of principal and interest on the bonds. The Debt Service Fund has carried a reserve balance of at least one year's debt service since 2009. Since 2005, annual revenue has exceeded annual expenditures in the Debt Service Fund due to the increase in the City's assessed valuation, the constant levy of 1.526 mills, and the relatively level annual debt service requirements. This resulted in the steady growth of Debt Service reserves. In 2009, the reserves exceeded the annual debt service on the bonds, and in 2010, the reserves exceeded the annual fund revenue. These events were important factors in Standard & Poor's rating upgrades. However, future increases in fund balance were deemed unnecessary and, in 2011, staff began conversations with the Finance Committee regarding the following three options: RECREATION CENTER TASK FORCE COMMUNICATION 4