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The proposed capital improvement projects on the Feb. 14 ballot have a price
tag of $47.5 million, but because of the nature of financing, the total cost
to Shawnee residents will remain unknown until the bonds are issued, if the
propositions are approved.
Propositions two through five on the ballot result in an ad valorem property
tax increase to fund $26 million in capital improvement projects that will
be paid for over 20 years, if approved by Shawnee residents.
The City of Shawnee¹s bond counsel base their estimates for financing the
projects on variables that change on a daily basis. The lending language of
the bond issues is based on projections from the most current information
available in the market, Sr. Vice President of BOSC, Inc, John Waldo said.
"There's four things as it relates to any lending. Four variables," Waldo
said. "There¹s no way to know all of these."
The four variables consist of Shawnee's revenue stream, the term - or length
- of the bond, the interest rate, and the size, Waldo said.
The city commissioners told the bond counsel what they wanted and the counsel used
what they believe to be the most realistic scenarios for all of the
projects.
"These are all just projections because we don't know what interest rates
are going to do, we don¹t know what property values are going to do and we
don't know what sales taxes are going to do," City Manager Brian McDougal
said.
"There are lots of variables that these guys are trying to wrestle
with so they have to make some assumptions so that they can advise us
whether or not ... the dollars we are taking in for these projects are going
to match what they should be."
When borrowing money there are interest rates, issuance cost, and the
principle costs, retired CPA Jim Bowles said. Bowles has been retired from
financing for 20 years and also belongs to the group Citizens for a
Responsible Government, a Shawnee group that is against the sales tax and
property tax increase propositions.
Bowles estimates that overall the projects, including the $21.5 million
sales tax proposition, will cost around $72.8 million after all the
outlayers are calculated. The GO Bond projects will come in around $43.1
million, Bowles said.
"That¹s not going to be very far off," Bowles said. "I used an average
interest rate cost of 4 percent, added in some issuance cost and that¹s all
it is."
The proposed capital improvement projects on the Feb. 14 ballot have a price
tag of $47.5 million, but because of the nature of financing, the total cost
to Shawnee residents will remain unknown until the bonds are issued, if the
propositions are approved.
Propositions two through five on the ballot result in an ad valorem property
tax increase to fund $26 million in capital improvement projects that will
be paid for over 20 years, if approved by Shawnee residents.
The City of Shawnee¹s bond counsel base their estimates for financing the
projects on variables that change on a daily basis. The lending language of
the bond issues is based on projections from the most current information
available in the market, Sr. Vice President of BOSC, Inc, John Waldo said.
"There's four things as it relates to any lending. Four variables," Waldo
said. "There¹s no way to know all of these."
The four variables consist of Shawnee's revenue stream, the term - or length
- of the bond, the interest rate, and the size, Waldo said.
The city commissioners told the bond counsel what they wanted and the counsel used
what they believe to be the most realistic scenarios for all of the
projects.
"These are all just projections because we don't know what interest rates
are going to do, we don¹t know what property values are going to do and we
don't know what sales taxes are going to do," City Manager Brian McDougal
said.
"There are lots of variables that these guys are trying to wrestle
with so they have to make some assumptions so that they can advise us
whether or not ... the dollars we are taking in for these projects are going
to match what they should be."
When borrowing money there are interest rates, issuance cost, and the
principle costs, retired CPA Jim Bowles said. Bowles has been retired from
financing for 20 years and also belongs to the group Citizens for a
Responsible Government, a Shawnee group that is against the sales tax and
property tax increase propositions.
Bowles estimates that overall the projects, including the $21.5 million
sales tax proposition, will cost around $72.8 million after all the
outlayers are calculated. The GO Bond projects will come in around $43.1
million, Bowles said.
"That¹s not going to be very far off," Bowles said. "I used an average
interest rate cost of 4 percent, added in some issuance cost and that¹s all
it is."
For the GO bonds, Waldo and Gander used a similar interest rate as Bowles of
3.90 percent. They projected the net assessed property valuation at 2
percent, which is the same percentage that the Shawnee Public Schools
financial advisors, Steven H McDonald and Associations, have assessed for
the area. It is a conservative growth rate in central Oklahoma, Gander said.
The low rate on the shortest bond is estimated at 1.92 percent, and the
highest rate on the longest bond is 4.7 percent. The 3.90 percent interest
rate is a rough average of those projections, Waldo said.
Waldo was not able to project an overall cost of the financing and the
projects, but did not agree with Bowles' assessment of $72.8 million
overall.
Waldo did say that interest and other fees are a given whenever
anyone borrows money for anything.
"There¹s going to be interest on [the bonds], that¹s correct," Waldo said.
"But that¹s kind of like saying my house is worth $150,000 but by the time I
pay interest on it, it really cost me $300,000. The cost of the issuance,
the cost of borrowing other than the interest is a very low percentage
number."
The G.O. bond propositions include:
- $3 million for the renovation the municipal pool and facilities, including the addition of a splash pad.
- $3 million for public safety communication systems, including the upgrade and installation of additional 911 communication towers.
- $13 million in street improvements, which include improvements on 45th street from Kickapoo to Bryan; Kickapoo Street from Spur to Farrall; Westech Road on Kickapoo and westard; as well as Main Street from Beard to Philadelphia.
- $7 million for economic and community development, which includes sidewalk improvements and neighborhood revitalization.
This the first story in a series on the proposed capital improvement projects. Look for the next installment on Tuesday.
