The Seymour Redevelopment Commission is relying on $9 million in bonds to pay off costs associated with several ongoing projects.
Those bonds are being issued by the Seymour Redevelopment Authority in a lease to the redevelopment commission to avoid the state’s constitutional 2% debt limit.
“We do all this because it avoids calling it debt of the city because the lease is not considered debt under the Supreme Court’s decision,” said bond counsel Richard Starkey with Indianapolis-based Barnes and Thornburg LLP.
The commission will pay back the bonds using tax increment finance revenue from the city’s main TIF district.
In a TIF district, tax money is captured from new industrial development or increased property values in the district and set aside to fund infrastructure improvements and economic development.
Matt Frische with Reedy Financial Group said the majority of the bond, $6 million, will pay off the city’s existing bond anticipation note, a short-term debt issued by the redevelopment commission earlier this year to pay for the realignment and extension of Runway 5-23 at Freeman Municipal Airport.
That project is underway and will be substantially complete by Oct. 15.
Another $1.3 million of the bond will be used as the city’s matching portion for the state’s 2020 Community Crossings grant, which funds Seymour’s road paving program, and $1.2 million will go to fund construction of the second phase of the Burkart South Bypass.
Phase II will connect the new Burkart Boulevard extension from South O’Brien Street to Airport Road. It is expected to go to bid in January with construction to start in spring 2021.
The remaining $500,000 of the bond will cover the costs of issuing the bond, construction contingencies, underwriter expenses, a surety policy, bond insurance and rating and miscellaneous costs.
The city used the same financing mechanism last year when the redevelopment authority issued and leased a bond for $18.35 million to fund several major projects, including construction of Phase I of the Burkart South Bypass, to pay off debt from the southeast sewer interceptor project, construction of a pedestrian trail along East U.S. 50 and the 2019 match for Community Crossings.
Frische said the city will close on the 2020 bonds in November, at which time the funds will become available.