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MPC
The City of Surprise tells us our legal general obligation bond capacity, but I am finding it hard to determine the maximum amount we can borrow and the debt now owed by the City’s Municipal Property Corporation.
MPC bonds was the method the city used to build the Stadium, these bonds can be sold without voter approval.
Bob:
The MPC has no legislative borrowing limits. Limits are based upon the ability of the revenue pledged to repay the debt. The ability to repay the debt depends on the revenue pledged (excise taxes, etc), prior MPC bond covenants (times coverage, etc), and the market (rates, demand, pledge, credit quality, etc). Typical coverage requirements range from 1.15 to over 2.00 depending on the quality the revenue. Legally, the MPC is a separate corporation. The City then enters into a lease agreement with the MPC. This debt is not back by the full faith and credit of the City of Surprise which would be property taxes. Water and Sewer projects frequently use MPC bonds (i.e. the bonds are backed by water and sewer charges). This is a more equitable way to fund these types of projects. The City of Surprise currently has three outstanding MPC bonds, one is a partial refunding on the excise tax issue, the other two have pledges against Development Impact Fees, Excise Taxes, and Sewer Operating Revenues. The total amount of debt outstanding and type is identified below. This slide was presented to the bond committee in December, however, the numbers are current. Please note all GO debt of the City will be paid off in 2009. Surprise will be the only City over 100,000 with no GO debt at that time.
General Obligation Bonds
$413,270
MPC Bonds (Excise Tax)
$43,885,000
MPC Bonds (Development Impact Fee/ Utility Rev)
$50,675,000
If you have any questions please contact Mr. Robert Niles, the Finance Director for the City of Surprise.
Sincerly,
Randy
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