Department of Finance
Reference: Borrowing Ordinance for Certificates of Participation
To: Mayor Gregory Mills and Members of City Council
Through: Michael P. Martinez, City Manager
Prepared By: Catrina Asher, Director of Finance
Date Prepared: September 16, 2025
PURPOSE
To request City Council’s approval of a Borrowing Ordinance authorizing borrowing to finance the purchase and renovation of a property at 133 S. 27th Street for use as an additional Police Department location.
BACKGROUND
The City is in need of additional space to support a growing Police Department. After evaluating a variety scenarios and options, staff determined the best option is to purchase an additional building to supplement the police operations. A building has been identified that would meet the City’s needs.
Purchase and renovation of the facility are estimated to cost $6,000,000. To purchase this building, City staff recommend financing the purchase through the issuance of Certificates of Participation, or COPs. COPs are a lease-purchase arrangement where investors purchase a share of lease revenues. Operationally, it acts similar to traditional debt where the City will make annual payments similar to traditional debt service. The new facility will serve as security for the financing.
On September 2nd, City Council approved a resolution approving the purchase of the property. Additionally, City Council approved a resolution stating the City’s intent to reimburse itself for costs associated with the project using future borrowing proceeds.
The next step in the financing process is approval of a Borrowing Ordinance authorizing staff to carry forward with financing activities and execute agreements related to those activities. The proposed ordinance includes the following terms:
- Maximum borrowing amount - $6,200,000
- Maximum interest rate – 5.25%
- Maximum term – 15 years
City staff will issue a Banking Request for Proposal to solicit interest from qualified banking partners. Staff will then review those proposals and select the proposal that is most appropriate for the City and that is within the limits of the Borrowing Ordinance.
CRITERIA BY WHICH COUNCIL MUST CONSIDER THE ITEM
City Council has already approved the purchase of the property and staff are working to finalize that purchase. The proposed financing that this Ordinance authorizes allows the City to spread the cost of the purchase and renovation over an extended period of time, thereby minimizing the financial impacts on the City’s resources.
FINANCIAL IMPACT
Annual payments related to this financing are estimated to be $610K per year. This amount will need to be appropriated (budgeted) by City Council annually for the term of the loan. This is incorporated into the City’s financial models and will be paid from the Capital Improvement Fund.
STAFF RECOMMENDATION:
Staff recommends approving the Ordinance as presented.
COUNCIL OPTIONS:
Ø Approve the Ordinance as presented.
Ø Reject the Ordinance.
Ø Request additional information.
Attachments:
Ø Ordinance
Ø Presentation