El Dorado passes a $7.63 million General Obligation Bond to help several infrastructure projects
The El Dorado City Commission and passed the issuance of General Obligation (G.O.) Bonds, Series 2021.
General Obligation Bonds are municipal bonds that provide a way for local governments to finance projects that may not generate a direct revenue stream but are beneficial to the community as a whole.
These bonds are backed by the City's credit and ability to levy taxes on its residents. Examples of the types of projects funded by G.O. bonds are the construction of public schools or highway systems.
The City Commission authorized several public infrastructure projects for this issuance, including:
- Douglas Road Improvement Project ($1,409,413)
- Marmaton Road Improvement Project ($1,041,542)
- Oil Hill and Rocky Road Improvement Project ($734,406)
- Union Tank Water Main ($204,015)
In addition, the City plans to acquire a fire engine to replace Fire Engine No. 9, which has reached its useful life as a primary response apparatus. The proposed Fire Engine acquisition will also require the use of funds from the Equipment Reserve Fund.
The Fire Department plans to classify Engine No. 9 to reserve status and replace it with a new engine at a cost of $900,000.
Finally, the City will refund its Series 2011A G.O. Bonds to capture cost savings arising from the low-interest rate environment. By doing so, it is estimated the City will reduce its interest expenses by approximately $34,000 per year.
The total principal amount planned for this bond issuance comes to about $7.63 million.
The City’s Financial Advisor estimates an annual debt service payment of $255,600 for the proposed bond issuance. The City will make this payment with proceeds collected from special assessments levied against properties benefiting from public infrastructure projects and a mill levy intended to pay the at-large portion of each project.
El Dorado already has a mill levy to pay the previously issued debt, and will not be increasing it further for the issuance of these bonds.