City Council OKs $368 million in bonds for projects

The city of Wichita is borrowing $368 million to pay for projects that include airport construction, aquifer recharge work, and park, bridge, sewer, flood and pavement improvements.

The Wichita City Council approved the sale of seven general obligation bonds and temporary notes for the projects Tuesday.

“This is probably the largest sale that we’ve had with the largest number of series at any one time,” said Shawn Henning, city director of finance.

Council approval means that as of Oct. 15, the city will have total outstanding bonded indebtedness of about $1.039 billion, Henning said.

Bonds can help municipalities pay for large projects. The city puts the requested bond amount out to bid and banks and other financial firms offer to loan the city the amount requested in return for interest on the bond. The city then repays the principal amount plus interest over a set amount of time.

The bonds will be repaid over several years from a variety of sources, including airport and water revenues. The bonds will not affect city property taxes, Henning said.

The city’s bond ratings are Aa1 from Moody’s Investor Service and AA+ from Standard and Poor, Henning said.

“We’ve held that rating for quite some time and in spite of the Great Recession and changes in employment in the community, we’ve been able to maintain that rating, which is a positive thing,” she said.

“I’m really glad that the last year and a half that we’ve managed the debt and been reducing the debt properly for a lot of reasons and this provided favorable pricing,” said City Council member Pete Meitzner during the meeting. “I assume this is because the bonding companies and rating agencies see that our size of debt had been reduced and allowed us a window to help finance these (projects).”

The bonds and temporary notes approved by the council, according to city documents:

▪ $156,445,000 in a series of general obligation bonds. The longest maturity is 20 years. The bonds include more than $147.3 million for the city’s aquifer storage recovery project, which the city plans to repay through water revenues, Henning said.

Other projects include a $1.3 million expansion of Botanica, $2.56 million Waterwalk Hotel development, buses and bus wash.

Bid winner was Citigroup Global Markets with an interest rate of 2.908 percent.

▪ $8,090,000 in taxable general obligation bonds. The bid winner was BMO Capital Markets with an interest rate of 3.103 percent.

The projects include redevelopment of Douglas and Hillside and Douglas Place, paving improvements at Berkeley Square and Greenwich Office Park, and a facade improvement of 915 W. Douglas.

▪ $11,230,000 in a series of general obligation bonds that mature over 15 to 20 years. The bid winner was William Blair and Co., with a 2.6515 percent interest rate.

The projects include paving, sewer, storm and water improvements throughout town.

▪ $7,145,000 in a series of general obligation tax increment financing bonds over 10 years. The bid winner was Robert W. Baird and Co., with a 1.905 percent interest rate.

The project includes $7.145 million in public improvements for the eastbank development of WaterWalk.

▪ $10,285,000 in taxable general obligation temporary notes was awarded to Wells Fargo Bank with a net interest cost (NIC) of .32 percent. The notes would go toward airport parking facilities, a remodel of 1801 Airport Road and facade improvements of 120 E. First St., The Lux apartments downtown.

▪ $80,550,000 in a series of general obligation temporary notes. The bid was awarded to Wells Fargo Bank with a NIC of .226 percent.

The notes would go toward several airport, water, park, bridge, sewer, flood, pavement improvements throughout the city; eastbank development for WaterWalk; city building ADA compliance; Century II repairs; and South Market parking garage repairs and renovations, among other projects.

▪ $94,435,000 in a series of general obligation temporary notes. Wells Fargo Bank won the bid with a NIC of .286 percent.

The notes will fund airport improvements – including passenger boarding bridges, a terminal building, Jabara Airfield pavement rehabilitation and Jabara Road rehabilitation and T-Hangar expansion – which the city plans to repay through airport revenues, Henning said.

No one from the public was present at the meeting to comment on the bonds.

This story was originally published September 17, 2014 at 6:13 AM with the headline "City Council OKs $368 million in bonds for projects."