Golf course bond issue set

At last week’s meeting, the city council approved the final numbers for the funding mechanism to finance work at Hillside Golf Course.

Marc Munford of Ameritas Investment informed the council about the Recreational Facilities Public Infrastructure Bonds that will pay for the project. The closing date for these bonds is Jan. 2, 2014.

“The city’s request was to net $1.5 million for the project, so in order to do that we have a bond issue size of $1.520,” Munford said.

While $1.5 million is allocated for construction, the additional money will go toward underwriting and legal council on the bonds which are issued in $5,000 increments.

The fiscal total for the bonds will be roughly around $170,000 per year, Munford said. The amount will mostly likely be a little lower or higher from year to year.

Average coupon will be 2.17 percent, while all inclusive cost including fees is 2.4 percent, Munford said.

“The trading desk told me yesterday that we had very good participation with local banks, local institutions, so they were pleased with that, so there was some demand for these bonds, which is good,” Munford said.

Although the goal was to make sure the bonds were issued before the end of the year, this wasn’t possible because of the holiday season, Munford explained.

“The only thing that was of concern on that is that I know you have some stuff coming down the pipe on other projects and we like to keep things bank qualified if we can, which is $10 million or less per calendar year,” Munford said. “But in talking to Gary I think we’ll be fine in being able to possibly straddle something next year depending upon how the process goes with some of the other projects. I know that was a concern, but we really kind of didn’t have a lot of options.”

The proceeds to pay for the bonds will come from 12 percent of the revenue generated from the new half cent sales tax, which runs through 2023. That percentage was initially projected to bring in $120,000 per year.

“Anything that’s short will have to come from the regular budgeting process,” said city manager Gary Person. “We were pretty conservative, I believe, in our sales tax projections on the new half cent sales tax that went in. This past year kind of proved that out. We believe over time because we tied it to a percentage and not an exact number at 12 percent, that we should be good after a couple years, covering the whole thing. That would be our hopeful projection.”

Councilman Chris Gay wondered what would happen if more than $170,000 per year is generated through the half cent sales tax.

“You would certainly have an option to use that additional revenue to do more golf course improvement projects,” Person said.

The voters mandated that this money be used for golf course improvement, he added.

The city used this same recreational bond process when it expanded the course from nine holes to 18.

A conservative estimate of $1 million in revenue per year was made for the new half cent sales tax, which went into effect in July of this year. Because of the excellent state of Sidney’s economy, it’s apparent to city officials that much more than the originally projected amount of $120,000 per year will be available for this project.

Construction on the project has already started and the anticipated completion time is June 2014, but the city hopes that it will be finished before that date.

The project paid for through these bonds is a new irrigation system, water pumping units and other infrastructure improvements at Hillside Golf Course.