Update from Financial Advisors on Debt Management and Market Conditions

Summary

The City of Fayetteville is preparing to issue its first tranche of General Obligation Bonds (the “2026 Bonds”) under a November 2022 voter-approved authorization of $97 million. This initial issuance will total $40 million in par amount, expected to generate approximately $43 million in proceeds for public safety and infrastructure projects. Specifically, $15 million is allocated to public safety and $25 million to public infrastructure. The bonds will be repaid over a 20-year term with an estimated maximum annual debt service of $3.8 million in FY2028, at an estimated interest rate of 3.59%. The public safety portion will be repaid by a dedicated 1.60 cents property tax rate, while the public infrastructure portion will be repaid by motor vehicle license fees. The City Council approved the bonds on January 12th, with a planned bond sale on March 24th and closing on April 15th. The City's General Obligation Bonds have received strong ratings of Aa1 from Moody's and AA+ from S&P.

Citizen Impact

Residents will see $40 million in new bonds issued for public safety and infrastructure projects, funded by a dedicated 1.60 cents property tax and motor vehicle license fees. The city's strong credit ratings (Aa1/AA+) suggest favorable borrowing costs, which can translate to more efficient use of taxpayer funds for these projects.

Confidence

high