Fiscal Note & Local Impact Statement
127 th General Assembly of Ohio
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BILL: |
DATE: |
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STATUS: |
SPONSOR: |
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LOCAL IMPACT
STATEMENT REQUIRED: |
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·
No
direct fiscal effect on the state.
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LOCAL
GOVERNMENT |
FY 2008 |
FY 2009 |
FUTURE YEARS |
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Joint Recreation Districts
– Franklin Park Conservatory |
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Revenues |
Potential gain equal to
the amount of bonds issued |
Potential gain equal to the
amount of bonds issued |
Potential gain equal to
the amount of bonds issued |
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Expenditures |
Potential increase in debt
service owed |
Potential increase in debt
service owed |
Potential increase in debt
service owed |
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Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.
·
The
bill authorizes a joint recreation district board, by resolution, to issue
revenue bonds beyond the legal limit on bonded indebtedness for the
acquisition, construction, furnishing, or equipping of property.
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The
bill also states that the bonds will have a maximum 30-year maturity. The amount of debt service owed each year
will depend upon the total amount of bonds issued, and the interest rate on
those bonds.
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Background
A joint recreation district
has authority to acquire property for, construct, operate, equip, and maintain,
and appropriate money for parks, playgrounds, playfields, gymnasiums, public
baths, swimming pools, indoor recreation centers, or community centers. All operating expenses are payable from the
district's general fund. In addition,
the district, in accordance with the Ohio Uniform Public Securities Law, may
issue bonds for the purpose of acquiring lands or buildings, or extending,
enlarging, or improving existing lands, facilities, or buildings for parks,
recreational facilities, and community centers and the equipment thereof. The district also has the authority to levy
a tax to acquire, maintain, and operate recreational facilities and community
centers.
Bill content
The bill changes the
governing entity of the United States Christopher Columbus Quincentenary
Jubilee horticulture exhibition, that is to say the Franklin Park Conservatory,
from a joint recreation board to a joint recreation district, and makes the
appointment of certain board members discretionary. The bill also vests the recreation district with additional
specified powers, most importantly the authority to issue revenue bonds.
Bond issuance
The bill authorizes the
district board, by resolution, to issue revenue bonds beyond the legal limit on
bonded indebtedness for the acquisition, construction, furnishing, or equipping
of any property, including all incidental or related costs. These revenue bonds may only be secured by a
pledge of—and a lien on—the district's revenues designated in the resolution,
including any property to be acquired, constructed, furnished, or equipped with
bond proceeds, after provision only for the reasonable costs of operating,
maintaining, and repairing the property.
The amount of debt resulting
from the issuance of the bonds will be dependent upon the total amount of bonds
issued, and the interest rate. The
bonds may carry a maximum 30-year maturity.
The Franklin Park Conservatory estimates that it will cost approximately
$20 million to finance the first phase of its proposed capital improvements
program. If the Conservatory chose to
finance the first $20 million phase entirely through a bond issuance, at a 4%
interest rate, given a 30-year maturity, the district could expect to pay
approximately $1.16 million annually in debt service.
Additionally, the bill
authorizes a district to issue renewal notes and refund any bonds whenever it
determines expedient, whether or not the bonds to be refunded have
matured. The final maturity of any
notes, including renewal notes, may not be later than five years from the date
of issue of the original issue of notes.
The final maturity of any refunding bonds may not be later than the
latter of: (1) 30 years from the date
of the original issuance of the bond or (2) the date by which, at the time of
issuance of the refunding bonds, it is expected that the useful life of all of
the property, except for the interest in land, that has been refinanced with
proceeds of the bonds will expire. This
provision could allow a district to expedite the debt service payments on the
bonds issued.
Other provisions – lines of credit and
insurance coverage
The bill also gives the
Conservatory the express authority to secure lines of credit with financial
institutions and to obtain property and casualty insurance, holding the
district alone (not the city of Columbus nor Franklin County) responsible for
repaying loans and paying insurance premiums.
The Conservatory already exercises these powers, covering these amounts
from its operating funds.
LSC fiscal staff: Terry Steele, Budget Analyst