Sandy Springs plans to use the savings it will gain from refinancing its City Springs bonds and a strong bond rating to raise another $60 million to buy land for its public safety building and fire stations and to renovate or construct those facilities.
The City Council and the Sandy Springs Public Facilities Authority (PFA) — which are the same bodies under different legal names – on Sept. 15 approved issuance of the Series 2020 Refunding Revenue Bonds. The original bonds were issued in 2015 in connection with the City Center project.
In a competitive bond sale, Wells Fargo Bank was the winning bidder among major investment firms with its true interest cost of 2.27%, said Courtney Rogers, senior vice president of Davenport & Co. Over the 27 years that remain on the bonds, refinancing saves the city $16.67 million, or approximately $623,000 annually beginning in fiscal year 2022.
The deal will issue up to $60 million in bonds to fund public safety capital projects including purchase of land and building, renovation of the public safety building and construction of two fire stations. The city will only borrow what it needs, Rogers said.
City Council on Aug. 18 approved the purchase of a four-story office building with 12.5 acres of land at 620 Morgan Falls Road for its Public Safety building after renovations.
Councilmember Chris Burnett said when the City Council begins discussing how to pay for its public safety building, it will have this additional $600,000 plus. And it will no longer need to pay rent for the current Police Department and Municipal Court, which are in an adjacent office park on Roswell Road.
“So we’re talking about a $1.2 million positive cash flow,” he said.
“It’s huge. We are going to save the city a lot of money and it opens up other opportunities for us,” said Mayor Rusty Paul.
The city will be able to complete some capital projects everyone on City Council knows need to be done, Paul said.
Public Safety and Fire Department projects are among those projects. The estimated costs outlined in the planned new bond issue would be restricted to:
- $11 million – Purchase of Public Safety property
- $30 million – Renovation of Public Safety building
- $10 million – Fire Station No. 2 construction
- $7 million – Fire Station No. 5 (panhandle location)
The city can begin to spend money on these projects even before they receive any funds from this planned bond issue. By approving another resolution, the City Council legally enabled themselves with the ability to reimburse the city for any money spent on these capital projects with future bond sales funds, said bond counsel Jim Woodward. He said that’s true even if they wait a year to issue bonds.
The final bond figure likely will be different in about a month when the 2020B bond sale comes before the council for approval. Rogers said they want to get the bond sale completed when rates are low before the presidential election because no one has any idea what will happen with the bond market then.
Rogers said Standard & Poor’s raised the city’s bond rating to a “positive outlook” from “stable” despite the pandemic and a recession. S&P had been changing all positive outlook ratings to stable for public organizations such as cities.
“So the fact that you got a positive outlook is a huge thing,” Rogers said.
Moody’s had rated the city “Aaa.” Rogers and Paul said the city’s plans for the new bond issue were part of their discussions with the two bond credit rating agencies
S&P said in the Davenport & Co. report that the positive outlook reflects robust economic growth, consistent positive financial performance, and additional long-term planning and financial policies.