The town of Longboat Key will borrow the money in bonds for its beach management plan.
The town has sorted out the budgeting for its beach management plan, settling on a maximum amount to borrow that is millions under what voters approved last spring.
Town commissioners voted 6-0 Monday to authorize up to $22 million in bonds through a competitive sale to finance several beach maintenance projects.
“This is really the final stop to issuing the bonds for the beach project that you approved going back to October of 2019 when you adopted the beach management plan for the next cycle,” Town Manager Tom Harmer said. “There’s been numerous public meetings and budget discussions.”
During the next five years, the town expects to pay a $49.5 million to renourish and maintain its 10.5 miles of engineered beaches. Of that, $22 million will be borrowed, with the remainder coming from other sources. Built into the bond plan is $1 million to ensure flexibility and minimize borrowing costs in volatile markets.
“The $22 million is again, a conservative number from an authorization standpoint,” said Hilltop Securities, Inc. public finance director Joel Tindal. “Effectively, at the end of the sale, we’ll fund $21 million. Plus closing costs, which we don’t expect to be $1 million, but it does allow for flexibility in terms of the types of bonds sold.
“For example, oftentimes, municipal bonds are sold at a premium. But in some instances, they’re sold at an original-issued discount, which means we would have to sell more bonds because the purchaser is … there’s a discount on the bonds they’re actually purchasing.”
Tindal said because the town is selling the bonds competitively, it does not know the cost of the underwriter’s fee yet.
“In some instances, they will propose or bid lower interest rates on the borrowing, but their fee to do that is higher,” Tindal said.
Other funding sources include $11.5 million in the town’s fund balance, a $2.69 million contribution from Manatee County, $1 million from Tourist Development taxes and up to $10.9 million from the Florida Department of Environmental Protection’s beach management funding assistance program.
The town went through the bond validation process in August.
In June, Harmer said he expected the actual total to be lower based on how much funding the town could secure from the state. That month the commission also passed a master bond resolution to move the projects forward.
The borrowing of about $21 million is much lower than the total voters approved earlier this year.
In March, District and Gulfside District voters in Sarasota and Manatee counties approved a plan to borrow no more than $34.5 million in bonds to finance the beach management projects.
Gulfside property owners will pay 80% of the debt through property taxes; with Bayside property owners paying 20%. Had Bayside owners rejected the proposal, the burden of 100% of the debt would have been passed on to Gulfside property owners.
Longboat Key plans to pay off the bond debt between six to eight years.
Fiscal year 2029 (Oct. 1, 2028-Sept. 30, 2029) is when the town is tentatively planning for its next beach renourishment plan.
For the current plan, the town is scheduled to undergo a credit rating process at the end of October and have a bond sale on Nov. 12. The final closing is scheduled on or before Dec. 9.