Tomorrow night, Tue, the City of Westlake Village’s City Council will vote on the final approval for the city to refinance some existing debt along with some new financing for the previously approved City Park/Sports Fields/Triunfo YMCA Project.
In Fall 2007, City staff and Council did extensive evaluation and analysis of the possibilities of financing the park project. And, the park financing and the refinancing of existing debt was deliberated, and budgeted for, in this year’s fiscal budget (voted on in June 2008).
With the falling of interest rates, the City will save $700,000 on existing debt. The new debt will come at a cost of approximately $500,000 per year (already budgeted for) which comes to 6.8% of the City’s operating budget.
The main deciding point for the park project was also in the Fall of 2007, when the City Council voted to approve its deal with the Triunfo YMCA for joint development of this property. This came after years of discussions with not only the Y, but also Canyon Oaks HOA, and feedback from the community. The entire park project has been in discussions for close to 10 years. For more information, see the article at https://westlakerevelations.com/?q=node/66
In essence, the City’s participation in this project is a land acquisition deal where it develops the “pad” for use as a park, and with the Y’s facility (built at the Y’s own cost). There are variety of community organizations that are expected to contribute and benefit from this development (again, see the above article for all the references).
The $16 million in bonds was initially supposed to be voted on last November, but the City Council opted to delay that vote because the Council hadn’t finalized the grading plans yet, and was also concerned that interest rates may drop further, and they wanted to see the economic crisis settle down some first.
Refinancing of the old debt ($7 million) will save the City over $700,000 over the remaining life of the existing debt. The new debt (about $9 million) will cost the City approximately $500,000 per year which represents 6.8% of the City’s overall budget, and again, is already budget in this year’s budget.
All of the new $9 million in debt will be used by the City with the majority used on this project. Some of the remainder may be for other City projects.
The City has a general guiding principle of wanting to maintain a minimum level of reserves which is tied to a formula based on revenues/expenses. This is currently at a level of approximately $5 million in minimum reserves.
That said, the City currently has in reserve approximately $15 million, and could have chosen to fund most all of the park project from that, but instead thought it would be more prudent to finance part of the park project on its own.
The Park project had a total projected cost of approximately $15 million to the City, plus the costs that the Y would incur on its own for its facility. But, the current economic climate is causing the construction bids to come in considerably lower, and by acting now, the City will likely save millions of dollars in costs. These construction costs are expected to be on the rebound as the economy recovers.