Council OKs $5 Million Bond Issue

FARMINGTON — The city of Farmington will have $5 million in new bond money in the bank Sept. 26, funds dedicated to improve streets and parks.

Farmington City Council approved an ordinance Monday night to authorize the issuance of $5,009,039 in sales and use tax bonds for the capital improvement projects. Revenue from a new 1 percent sales tax will be used to pay off the debt.

City voters approved the new 1 percent sales tax in a June 13 special election. One-half of the sales tax revenues will be used for debt service on the new bonds and revenue from the other half of the 1 percent sales tax will go into the city’s general fund for operations and maintenance costs.

The city collects about $730,000 annually from a 1 percent sales tax.

The new tax takes effect Oct. 1 and is a permanent tax. At the same time, an existing sales tax

being collected to pay off a 2007 bond issue will expire and no longer be collected. Farmington’s local sales tax rate will remain the same at 2 percent.

Voters on June 13 also approved the city’s request to issue up to $2.8 million in street improvement bonds and up to $2.3 million for park and recreational improvement bonds.

Ryan Bowman with Friday, Eldredge and Clark law firm said the city will issue $10,000 less than what voters authorized in the special election.

Money from the bond issue will go into two construction funds: $2,795,000 for street projects and $2,295,000 for park and recreational projects. Bowman said money in each account will not be co-mingled and can only be used for the stated purposes outlined on the special election ballot.

For the street improvement funds, the money can be used for new and existing improvements for streets, curb and gutter, drainage, lighting, utility adjustments, sidewalks, purchase of land for a new public works building and to build a new public works facility.

For the park and recreational improvement account, money can be used for improvements to new and existing park facilities, including equipment, parking, drainage, lighting and utilities.

The city will close on the bonds Sept. 26 and will have its money in the two construction funds on that date and can begin work, according to Bowman. Bank of the Ozarks will serve as bond trustee.

Kevin Faught with Stephens Inc., of Fayetteville, said 5 percent of the bonds must be obligated within the first six months and the city has about three years to use the proceeds.

The first principal payment of $115,000 is due Oct. 1, 2018. The interest rate on the bonds ranges from 2 percent to 3.625 percent, with a total payout of just over $7 million, including principal and interest.

In other action, City Council: — Approved a 2018 Dodge Ram truck for the police department for $40,000. — Approved an ordinance to rezone 295/297 Kelli Avenue from residential to highway commercial. — Approved a contract for an oral history project. — Placed an ordinance for a new zero-lot-line zone called R-3 on first reading by a 5-2 vote.