After consultation with the City’s financial advisory firm, Yuma Finance Director Douglas Allen is recommending the issuance of $116M in pledged revenue bonds to fund projects in the Capital Improvement Plan.
Yuma has traditionally funded local infrastructure improvements using current fiscal year revenues and carryover balances. Mark Reader of financial consulting firm Stifel explained, however, that capital costs have roughly doubled on public works projects in the last few years, and pay-as-you-go funding is becoming a challenge for many cities.
Allen said the bond issuance will speed up completion for infrastructure development and provide predictable budgeting. It will also allow the City to better manage cash-on-hand for emergencies and other unforeseen economic circumstances while providing a short-term solution to manage Yuma’s annual expenditure limitations.
Cities’ financial expenditures are limited under a formula approved by Arizona voters in 1980. Since that time, Yuma’s population has increased significantly, as has inflation. To make up for revenue needs, cities can request voter approval for a one-time override, a temporary alternative or a permanent adjustment.
Yuma is one of only six municipalities in the state that has never requested adjustments to its expenditure limit. Post-pandemic pressures have left the City with little room to maneuver its expenditures while maintaining service levels.
The City plans to ask voters in next year’s November election to increase its base expenditure limit, which will enable full use of revenues and cash resources. Raising the limitation does not constitute a tax increase.
The bond issuance is exempt from the expenditure limitation, as are the principal and interest on debt service. Reader explained the issuance will leave Yuma in a solid financial position for the rest of 2025 and into 2026 and 2027.
The issuance would consist of $72M in pledged revenue obligations to be repaid from excise taxes and $44M in utility revenue obligations to be repaid with water and wastewater revenues.
The money raised would be used for road improvements, park projects, downtown improvements, water and wastewater projects, and public safety.
Road improvements would see $35M from the $72M bond. Park improvements would receive $17M. Downtown improvements would receive $7M, and the remaining $13M would go to public safety.
The $44M for utilities would be split evenly between water and wastewater.
Yuma City Council introduced two ordinances to authorize the issuance, which could be adopted in the next Council meeting Oct. 1. The bonds could then be issued 30 days after approval and close in late November. (Source)