Issue Statement:   In 2018, City voters approved $40 million in general obligation bonds for the replacement and renovation of facilities and related improvements. The City sold $26 million of these bonds in 2020.  As discussed during the FY 2022 budget development, the City has been planning the issuance of the remaining $14 million in early 2022 to take advantage of the low interest rate environment. 

In the past months, City staff have worked with the City Attorney, bond counsel, our financial advisor, and the underwriter on the preparations for the 2022 issuance, such as drafting the preliminary official statement and rating agency review.  Legal authority is required from Commission for the actual sale of the $14 million.  The proposed supplemental ordinance provides this authority.  Sale of the bonds is planned for early 2022.

Recommendation: Adopt an ordinance authorizing the issuance of the Series 2022 General Obligation Bonds in an amount not-to-exceed $14,000,000.

On November 6, 2018, Oakland Park voters approved $40 million in general obligation bonds by a margin of more than 2-1. In 2019, the City Commission adopted an ordinance establishing the legal and financial form and framework for the general obligation bond issuance.  Actual issuance of bonds from this framework requires the adoption of a supplemental ordinance. 

A supplemental ordinance authorizing the sale of $26 million in general obligation bonds was approved by Commission in May 2020.  These bonds were rated as high quality, AA, by S&P Ratings. Demand for the bonds was very high and the sale was oversubscribed, with orders of more than $66 million for the $26 million in bonds being sold.  The all-in true interest rate for the sale was 2.258% over 20 years.

During the FY 2022 budget development, it was recommended that the City begin preparations to issue the remaining $14 million.  To this end, the City issued a request-for-proposal in September 2021 for underwriting services; the City Commission appointed RBC Capital Markets, LLC as the underwriter for the 2022 bond series on October 20, 2021.

Legal and financing documents for the bond issuance have been prepared and reviewed by bond counsel, the financial advisor, the City Attorney's Office, and City staff. 

This supplemental ordinance establishes the specific authority to issue the Series 2022 General Obligation bonds and establishes the details regarding the term (approximately 20 years), execution, and registration of the bonds. The supplemental ordinance also establishes the not-to-exceed amount of the principal for this bond issuance, which is set at $14 million, and the final maturity of the bonds to be issued, which is February 1, 2042.   As a general obligation bond approved by the voters, the ordinance notes the use of ad valorem taxes and pledges the general taxing authority of the City to pay the bonds.  

In recent months, the Federal Reserve has signaled their intention to raise interest rates in 2022 potentially as early as March or June while winding down their bond-buying stimulus program.  Changes in Federal Reserve monetary policy, inflation, and continued economic disruptions due to COVID-19 create great uncertainty with the mid and long-term conditions of the municipal bond market.  Despite long-term uncertainty, the current market for the sale of the bonds is considered to be favorable to the City as the overall outlook for the municipal debt market is strong going into 2022.  Based in current market conditions, the issuance of the remaining $14 million in early 2022 will allow the City to take advantage of the favorable market and lock-in a low interest rate structure for the 20-year life of the general obligation bonds.