City Council - Special Meeting

It's 5:30. Mayor Okay, I'd like to call the meeting to order. This is uh Bella Vista City Council special meeting, February 3rd, 2026. And uh we'll start with roll call. Council members Harp here. Hughes absent. Newport here. Wilms here. Isbel absent. And hunchel

here. Thank you. We have uh four uh councilman present. So we have a quorum. Um for uh new business uh before I go into the uh ordinance, we have a we're going to have a couple presentations. Uh Jason, mayor, I was just going to say perhaps if you go ahead and suspend the rules to read the ordinance by title only and get into the first reading. Okay. Um

Okay. So, this is I want to let me say this. This is an incredibly important piece of legislation. So, it's very very important that the record be very clear about what we're doing. So when you say so moved, I assume you mean you're moving to suspend the rules of order and procedure to allow all ordinances on the agenda to be read by title only. Is that correct? The words right out of my mind. Okay. Okay. I don't I don't see a red light. Are we recording? Oh, I'm sorry. Thank you. Is there a second?

That was Larry Wilms and Craig Honchel. Uh, roll call vote to suspend the rules of order and procedure to allow all ordinances on the agenda to be read by title only. Council members Wilms, yes. Honchel, yes. Harp, yes. Newport, yes. Motion carried six to zero. Thank you for that,

Mayor. It did not pass six to zero. It passed four to zero. Sorry. Yeah. Uh let's see. Uh so I'll go ahead and read the ordinance for the presentations. Ordinance and the ordinance authorizing issuance of sales and use tax bonds for the purpose of financing and refinancing the cost of capital improvements pledging collections of a 1% sales and use tax to pay the principle of an interest on the bonds. Prescribing other matters relating there too. and declaring an emergency. Uh we were going to have a couple presentations. Cheryl Schlutterman from Raymond James. Good evening, council and mayor. If you recall, we've been working on this since around August and the voters approved the sales tax um extension of 1% and then the various capital improvements that were the ordinance covers today. And last time I was here, we showed um in the calculation we were estimating an all-in interest rate of 3.73% with a final maturity of 2041, expecting those bonds to pay off by 2034, assuming zero growth and no decline in your sales tax collections. Um, since that time we have done a presentation with S&P for to renew your rating and get a rating on these bonds and they affirm that with a double A rating um with a stable outlook. So that is wonderful. um we worked really hard to get that structured so that you would

have two times coverage in order to achieve that and um it speaks to the uh how how wellrun the city is and the growth of the area. So um congratulations on that. And then today we we had a pricing call yesterday with the mayor and Kim and the underwriters um Bob with uh Bob Wright with Cruz and Associates and Kevin Fa with Stevens Inc. and myself and our desk and to talk about what we expected the pricing to look like. Um at that time we were estimating 3.77% overall AIC the all-in interest rate and we were able to shorten the final maturity to March 1st of 2040. So we reduced that by one year and then expect expected payoff of 2033. So also um reducing that in some of our structuring and um we had an order period from 9 to 10:30 this morning and we were able to get you an all-in rate final rate of 3.76%. Everything else basically stayed the same. Again, that's so it's a 14-year final maturity and you're most likely going to pay that off in seven years or less, assuming no growth in the sales tax. So, regarding the sale, it went very, very well. We had u approximately $25 million of bonds that we were offering and we had $66.7 million in orders. So, we had several of the maturities that were quite a bit overs subscribed. We did have one maturity um that the underwriters were willing to underwrite which means they were buying those bonds and taking those in-house to

then try to sell. Um so we appreciate that from them. Um Bob from Cruz gave me a list of the orders and I'll pass those out just to show you the diversity in um we had in 22 institutional buyers investors of your bonds and then um some individual accounts. So, I'll I'll pass that around now. So, we will get a price a final pricing book to you later this week um with some more details in it. But that is um a summary of of what occurred. So then today um the mayor gave his verbal award earlier today and then um with your approval of the ordinance tonight we will sign the BPA which is the official purchase of the underwriters of your bonds and um then we will close on March 17th and um you will have your funds for your projects. Any questions before Ryan Ryan will come up in just a second? Yeah. Can you give me the reader's digest version of what I'm looking at here?

Yeah. So, these are the different investors. Um, and what this is, this shows that you had a significant number of different investors interested in the bonds and that just helps with um putting some pressure on the interest rate and allowing us to to get you the interest rate that we did. So, um, you can see that there's some local Arkansas, uh, banks on here, but there's also, uh, quite other, you know, larger variety of investors as well. So, um, but yeah, this is the total orders. And then what we have to do is, um, Bob and and Kevin worked with the investors and got them to, uh, you know, we couldn't fill all of them because there's not enough bonds. So, we are able to negotiate some of the basis points down on some of the um maturities. So, yeah, that's all. It's just a representation of who all bought your bonds.

Thank you. Yep. Any other questions? The only comment is it looks from this from this list here and these are your institutional list. Um you got a pretty broad cross-section. I mean, you really We have insurance industry as well as others. So

yeah, they did a great job. We um today the taxable were very popular. We don't see those a lot. So the taxable bonds went very fast and um they had to work a little harder to get some of the tax exempt sold. But um other than that one maturity, it was pretty much um fully subscribed. Any other questions before Ryan explains the ordinance? Okay. Uh, next we have Ryan B. Thank you, Cheryl. Next we have Ryan Bowman from uh, Friday Eldridge and Clark.

Yeah, thank you, mayor. Good evening. Um, I think in uh that Wanda actually handed out a copy of the redline bond ordinance from what you had in your agenda packet. That actually completes the ordinance following the bond sale this morning. And so I'd like to just walk through the changes that were made from what you have in your agenda packet. But just to refresh your memory on uh at the election in November, the voters approved bonds for six different purposes. And those are listed in uh A through F there on page one. And so there were bonds to finance the fire and city administration complex, uh fire improvements, street improvements, police improvements, and then the refunding of the 2020 sales tax bonds as well as the franchise fee issue that we did back in 2024. And so if you look over on page two in the second whereas clause uh we're issuing a total of 25,195,000 in bonds between series A and series B. Series A is for the refunding of the 2020 bonds and the 2024 bond. So it's all refunding. That principal amount is 8,735. The remaining 16,460 are for uh the new money projects that the voters approved uh back in November. If you look at page two, um the whereas clause there in the middle of that page, that is the purchase price for the series A bonds and the purchase price for the series B bonds. Turning over to page three in section four, we again added the principal amount of the series A bonds and the principal amount of the series B bonds 8,735 and 16,460. And then at the bottom of page three, you'll see uh the maturity schedule for the series A bonds. Those are the taxable bonds again for the refunding of

the 2020 and the 24 bonds. And those mature on March 1 of 2032. And then at the top of page four, you'll see the maturity schedule for the series B bonds, which are the tax exempt bonds, and those mature from 2032 through 2040. Now, keep in mind that those are the scheduled maturity on the bond issue. The collections of the 1% tax that the voters approved back in November, all of those sales tax collections must be used to pay debt service on this bond issue. So, let's just say for example, uh you're collecting $100,000 in sales tax collections in a year and your debt service is only $80,000. Well, that extra $20,000 will be used to pay off the bonds early uh from the back end of the maturities. So, what you see at the bottom of page two or page three and the top of page four are the scheduled maturities. And as Cheryl mentioned, based on collections for the past 12 months and no growth in those sales tax collections, the bonds would be paid off in 2033. So that's seven years earlier than what is um shown here on pages three and four. And again, with growth in sales tax collections, as you would hope you would have here in the city, uh that maturity date would go uh even earlier. Continuing on to the changes that were made in the ordinance. Um over on pages seven, starting on page seven is the form of the series A bond and on page eight we again inserted the principal amount of the A bonds as well as the ordinance number 20263 assuming that you adopt this ordinance tonight. Um on pages nine and 10 are uh the various principal amounts that are coming due uh in 2029, 2030, 2031 and 2032.

And then on page 12 is the form of bond for the series 2026 Bond and the same changes are made made to the series 2026 Bond. Again the principal amount 16,460 is added on page 13 and then on page 14 uh the various principal amounts for the maturities in 36 uh through uh 2040. Uh continuing on the next change will be uh at the top of page 19 uh in section 10. Um, we are issuing all of the bonds that the voters approved for the fire and city administration complex, for the streets, and for the police improvements, but we are only issuing a small portion of what the voters approved for uh the fire improvements. And so you as a city are reserving the right in this section of the ordinance to issue in the future up to 5,385,000 for the remainder of the fire projects that the voters approve. There was not a need to issue all those bonds for fire today. And so the plan is to issue those bonds in the next couple of years for the remainder of the projects that the voters approved. And so we would go back through this process again at that time uh without of course having to go back to the voters over on page 21 and section 15. I'll just point out to you that um the bond trustee which is bank OK in Little Rock they will serve as the trustee for the bond issue and they will actually hold uh the various project funds called construction funds and there will be a construction fund for each of the four projects that the voters approved. Uh the money will be held by Bank Ozk. Uh

they will then pay the third party uh once they receive a requisition and an invoice from the city. So, it's the same procedure that we had back in 2020. That money is not actually held. Those millions of dollars are not held by the city. They are actually held by the bond trustee. And then there's a requisition process that's laid out in section 15 by which those uh monies will be paid by the trustee to uh the third party vendors. Over on page 25 and sections 27 and 28, we have allocated uh the principal amounts of the series A and B bonds between the various purposes that the voters approved. Those are all the changes to the ordinance from what you had in your agenda packet. I will note that uh there is an emergency clause section 33. So, assuming you adopt the ordinance tonight, would ask that you separately approve the emergency clause so that uh the ordinance will go into effect immediately and the mayor would then be authorized to sign the bond purchase agreement with Cruz and Associates and Stevens as the underwriters locking in those interest rates that Cheryl mentioned a few minutes ago. Again, thank you for the opportunity to serve as bond counsel to the city. I'm happy to answer any questions you have with respect to the ordinance. Sh,

did you mention there are track changes that we should see on page seven? Seven. Let's see. On page seven. No. Okay, great. No, not on seven. Uh Travis, can you explain the the hold off on the fire department? Which which portion of the voter pass legislation are we holding off on for a future date? Yeah, that's that's probably a better question for city staff. So, I would I would defer to to the city with respect to that.

Yeah, what we did is uh you know, you're supposed to complete all these projects in three years, three years from when the bond closes. So, we held off on fire station number five. And uh the pumper truck, which you folks actually approved in December, has a 35month lead time, which is less than 3 years by a little bit. But we thought, well, just to be safe, we might as well put the puber truck in there with fire station number five. and then you know when we have our second closing uh right now we're thinking 2028 but you know it's really open to when that might be but uh we want to make sure we can get it done in three years so we thought well let's hold off on those couple of things and then we can have a second closing later and and take those down. But that was the reason for it really was the pressure being done in three years. And with fire station number five, we thought, well, this will give us some more time to, you know, work out the details and whatnot.

It's three years from the closing. It's three years from closing. That's correct. Okay. Thank you, mayor. So, uh, Larry, and when you say, uh, you need to spend that, I think I'm not sure, but I thought that the requirement was that you have to have a commitment. In other words, you have to have a contract that's been awarded. That's a commitment. And so with with Yeah. with has to be done before the end of the three-year time frame. The money has to be out the door within three years. Has to be paid out.

Correct. That's correct. And you have to either have a contract to spend or spend at least 5% of the bond proceeds within six months. So that's where you're you're allowed to have a contract to meet that requirement. But the three-year requirement is to have that money actually. Is that an Arkansas law or is that that is a federal tax law? That's a federal one. Yes, sir. Okay. Yeah. I was under the assumption you only had to have it under contract by the end of this time frame of three years. The IRS wants it out out the door. Yes, sir. Yeah.

Appreciate that. And most of these things we feel, you know, pretty confident on like the street pavings for a couple of years and the police cars are for a couple of years and the communication towers we feel confident we can definitely have done well before that. So, you know, the street already put in for a lot of equipment at our last meeting. So, uh you know, we feel good about not having any problems with the with the time limits. And you'll recall that back in August when we actually called the election, we adopted a resolution that authorized you to go ahead and spend city funds and then reimburse yourself from bond proceeds once we close. And so in talking to Kim, there will be some expenses that you've paid for uh in the past six months or so that you'll be reimbursed for from from proceeds of this bond issue. How how how far before the bond process like this can you make that commitment by a an ordinance ahead of time? How far can you go? Can you go two years or one year?

You can go you you have to adopt the resolution within 60 days of making the expenditure. So in other words, that when we adopted the resolution back in, I believe it was August, first part of August, maybe the 4th, you can go back 60 days from that point and pick up anything that you on as long as it's part of these early. So it would reach back early June then. It would. Yes. And it was mainly on the construction, you know, at the fire station number one there. So on on page 21. Larry, go ahead.

I'm I'm sorry. Um, on page 21, you talked about uh some things there and I don't know that I fully captured all of that in my brain on page 21 of your ordinance. Yes, sir. The construction funds and the requisition process. Yeah.

Okay. So there will be four construction funds, one for each of the projects that will be held by Bank Ozk and there is a requisition uh that will be signed by the mayor or the finance director. And then uh if you look in the second paragraph of subsection B of section 15, uh the fire chief must sign for the fire and city administration complex construction fund as well as the fire construction fund. the street supervisor will sign for the street construction fund and the police chief for the police construction fund. So, there is a requisition uh stating that the city needs to make a payment of, let's say, $300,000 to company Y. That requisition will be signed by one of those individuals, depending on the construction fund that it's coming from, along with an invoice will be submitted to Bank Ozk. Then Bank Ozek will actually submit payment for that $300,000 directly to the company.

So again, very similar, exactly the same as as what was done back in 2020 for that sales tax issue for this building. For this building. Yeah, correct. Thank you. Yes, sir. Craig, were we just needing are we needing to make a motion for suspend the rules for third and final? You will have to if you move ahead, but Well, that's so we'll we'll be as soon as we're ready. Absolutely. Okay. Well, that I'm not trying to jump the gun. I know if there was was there any more information? I'm here as long as there are questions.

Okay. Well, that I didn't know if there was somebody coming up behind you or Yeah, I don't I don't believe that there is. He's bringing up the rear.

Yeah, I I wanted to mention just a couple things. I really appreciate uh Ryan. Is there any more questions for Ryan? I want to make sure. Okay. Uh I just wanted to mention a couple things. Uh you know, this council approved to go ahead on August 4 and then the voters approved in November by seven over 70%. which I found very gratifying. So, since either of those times, this deal has only gotten better. The interest rate has gone down. You know, when we first talked to Cheryl quite a while ago, the interest rate was around 4.8%. And I thought, yikes, that's high. But I was pretty confident we're going to get some rate cuts out of the Federal Reserve. And we did. So to have an interest rate of 3.76% is is a good feeling compared to where we started from. Second thing is the payoff is much faster. Now they're talking about if our sales tax remains the same, doesn't increase but just remains the same, it' be paid off in seven and a half years. And originally we were thinking nine or 10 years. and uh you know the amount uh on the taxable side uh and they did tell us when they first gave us the estimates Ryan Bowman and Cheryl both said we're conservative we give the highest possible number but they said the taxable side which is paying off the two loans the revenue bond and the 2020 bond would be 11.3 million and now it's only 8.73 million So it it's way better than what we started with is my point I guess. And of course getting the credit rating in double A I found that very gratifying. You know our first bond was double A minus and then we got an improvement

about a year ago. So it was a whole new process this time and uh uh we figured we get one of those two ratings and I felt really good about getting the double A. So, uh, just wanted to point out those things that, you know, we feel good about how this transaction is going. I think it's really very conservative and, uh, pretty impressed with how fast it may be paid off. So, Larry,

and the credit goes to our our residents in Bella Vista who buy online because that's likely where the largest increase in generation is. So, we thank you all out there. Keep on buying. So, if we're ready, uh, yeah, we would like to have a motion to, uh, suspend the rules and, uh, and go to third and final reading. I would make a motion to suspend the rules and go to third and final reading of this ordinance. Do you need the ordinance number? No. Okay. Second.

Uh, that was a motion by Larry Wilms and a second by Travis Arp. A roll call vote on the motion to move to third and final reading. Suspending the rules. Right. Suspend the rules and move to third and final. Council members Wilms. Did you read the title? Did you read the title? There's no debate allowed during the roll call after the Okay. Uh yes.

Hansel. Yes. Harp. Yes. And Newport. Yes. Motion carried uh four to zero. I'll read the ordinance for the third and final time. An ordinance authorizing the issuance of sales and use tax bonds for the purpose of financing and refinancing the cost of capital improvements. Pledging collections of a 1% sales and use tax to pay the principle of an interest on the bonds. prescribing other matters relating there to and declaring an emergency. Uh Jason, do we uh pass the uh ordinance and then do the emergency clause after?

Yes, sir. That's a separate two steps. Okay. I'll make a motion to approve. If there's no discussion, make a motion to approve ordinance. Okay. Second. Okay. That was a motion by Larry Wilms to pass the ordinance and a second by Craig Honchel. Uh roll call vote. Council members Wilms, yes. Honcho, yes. HARP, yes. And Newport, yes. Motion carried four to zero. So, at this time, mayor, you need to entertain a motion to adopt emergency clause.

Okay. Uh, could we have a motion to adopt an emergency clause so it would be immediately effective? Make a motion to adopt the emergency clause. Second. That was Craig Hansel and Travis Harp. Uh, roll call vote on the emergency clause. Council members Wilms. Yes. Hansel, yes. Harp, yes. And Newport,

yes. Uh motion carried four to zero. I appreciate that. Um I believe that's all of our business for tonight. I would like to thank the four council members who were able to attend tonight. I was Denver more happy to see you. So meetings adjourned.