MARCO ISLAND — In the complicated web of what to do with the city’s $157 million outstanding utility bonds and loans, Patricia Bliss, finance director, asked Marco Island City Council for direction Monday.
“We’re at a crossroads,” she said. “Are we going forward with the GO (General Obligation) bonds?” That decision would remove capacity charges from water bills and move debt to property tax bills, she explained. It would also require a referendum.
John White of Fifth Third Securities, one of the city’s financial advisors, outlined the procedure for council in an 18-step process. As a first step, council would need to determine by April 16 its intent to authorize a bond referendum.
Upon passage of a resolution in May, council would then forward the ballot question to the Supervisor of Elections for inclusion in the primary election being held Aug. 14. If the referendum were approved, GO bonds could be issued by Jan. 1, 2013.
In a presentation created for the council, White stated there were no guarantees for what rates would be available when refunding comes to market. Using GO bonds was more of a policy decision than a savings decision, he stated.
White proposed going another route that could have favorable savings for the city, particularly from refunding bonds issued in 2003 and 2008. He suggested refunding bonds in 2003 of $58 million and in 2008 of $6.8 million. That would net a savings of $2.7 million, or an overall savings of 4.2 percent. White warned his numbers would not be exact due to natural fluctuation of market values.
Both options would impact the city’s desire to consider a public-private partnership to use an equity sale to substantially reduce utility debt. The idea was initially discussed by council at a rate workshop on March 14.
During a presentation by Gerald Hartman of GAI Consultants, who confirmed city utilities were in good shape, Hartman suggested the city consider a public-private partnership. He said the option might be able to cut the city’s utility debt by as much as half. The city would do so by providing a concession for a private entity to control the “facilities only” portion of water and sewer utilities.
On Monday, council determined it would request city staff research the private-public partnership as a third option for reducing utility debt.
Bliss told council the city had not sought the advice of consultants to look at a public-private partnership. Bond counsel, tax advisors, financial advisors and utility consultants would need to be engaged before a model could be created to present to council, she said.
Bliss estimated it would take a minimum of three months to gather the necessary information.
Councilor Frank Recker made a motion to table any decision on debt refunding for 90 days until Bliss could bring back information on the feasibility of a private-public partnership. The motion to table passed by a vote of 5-2.
“We don’t have enough data to make a decision tonight,” he said. “Option 3 (the private-public partnership) deserves a reasoned analysis and study.” Council’s first scheduled meeting after the 90-day period is July 16.
Marco Island City Council’s next regularly scheduled meeting is 5:30 p.m., April 16, in the Community Room, 51 Bald Eagle Drive.