Baldwin City Council considering proposal that puts all bond funding in writing

photo by: Elvyn Jones/Journal-World File Photo

Baldwin City Hall, 803 Eighth St., is pictured in this file photo from 2016.

The Baldwin City Council will take a rare third look at a measure that requires it to identify the source of funds used to retire debt when approving a bond issue.

With the ordinance on the agenda for the second time at its Jan. 5 meeting, the council agreed to have its bond counsel review the measure and bring it back for final consideration on Jan. 19. The council traditionally has an up-or-down vote on proposed ordinances when they are considered a second time.

Mayor Casey Simoneau said the City Council wanted added assurance from its bond counsel that the ordinance’s language would not put any constraints on the city’s bonding authority or increase bond interest rates. The city has already received assurances from the Kansas League of Municipalities that the ordinance would do neither, he said.

The ordinance has three clauses, one of which is that it becomes effective on approval. The second clause requires that the source of repayment funds be identified before any bonding can be approved. The third clause gives a future City Council the right to eliminate any identified utility rate increase approved to pay off a bond when that debt is retired.

With the exception of ballot-approved initiatives in which voters approve funding sources for projects, cities customarily fund large debt with general obligation bonds, which state that they are backed by the “full faith and credit” of the city. General obligation bonds are used even if the governing body intends to use specific funds, such as utility rates, for debt service. The full faith and credit language, which makes all available revenue sources applicable to retiring the debt, provides greater assurance to bond investors and thus allows for lower bond interest rates.

Simoneau said the goals of the ordinance were to allow future councils the option of eliminating high rate increases for debt service when bonds are retired and to better inform the public about city finances.

“We want to create greater transparency so our residents will be able to see where bond money is coming from,” he aid.


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