HomeMy WebLinkAboutA007 - Council Action Form dated September 24, 2002 ITEM # 3
DATE September 24, 2002
COUNCIL ACTION FORM
SUBJECT: SALE AND ISSUANCE OF ESSENTIAL CORPORATE PURPOSE
GENERAL OBLIGATION BONDS FOR STREET, STORM SEWER, AND FIRE
APPARATUS PROJECTS PER THE CITY CAPITAL IMPROVEMENT PROGRAM
($5,885,000), GENERAL OBLIGATION REFUNDING BONDS ($7,825,000), AND
ELECTRIC REVENUE REFUNDING BONDS ($7,620,000).
BACKGROUND:
The budget for FY 2002/2003 included General Obligation Bond capital improvement
projects in the amount of $7,615,000. Delays in the Ames Quarry project and a review and
adjustment on other projects have resulted in a lowering of the issuance amount to
$5,885,000. Projects to be funded by this issue include the following:
Fire Apparatus/Equipment 900,000
U.S. 69 Improvements/13th and Grand 50,000
U.S. 69 Improvements/Lincoln Way and Grand 30,000
U.S. 69 Improvements/6th and Grand 180,000
South Duff Area Storm Sewer 510,000
Residential Low Point Drainage/Wilson 100,000
S.E. 5th Street Storm Sewer 120,000
Arterial Street Rehab. (Dayton) 1,276,901
Arterial Street Rehab. (13th St) 420,000
Cy-Ride Route Reconstruction/Clark 600,000
Collector Street Rehabilitation/Sheldon and Knapp 500,000
Arterial Street Rehab/N. Dakota Reconstruction 485,000
State Street Widening 100,000
6th Street Recon./Streetscape 150,000
Bridge Rehabilitation/Lincoln Way Over Squaw Creek 400,000
Issuance Cost 63,099
Total $5,885,000
The reduction in the issue amount and lower interest rates will result in a reduction in debt
service cost of approximately $240,000 for FY 02/03. This savings will be used to reduce
the debt service levy in future years.
Interest rates have fallen over the past several weeks and refunding of three of our
outstanding bond issues has now become favorable. The G.O. Bond Series 1994B,
1995A, and 1995B can now be refunded with an estimated net present value savings of
over 4.00%. The refunding will result in debt service savings of approximately $40,000 per
year from FY 02/03 through FY 08/09. The Series 1993 Electric Revenue Bonds can also
be refunded at a net present value savings of over 4.00%. We have structured the debt
service on the refunding bonds to shorten the term of the bond issue. This results in
approximately the same debt service cost to the Electric Fund for fiscal years 2002/2003
through 2006/2007 and a savings of approximately $500,000 in FY 2007/2008 when
compared to the current debt service cost.
ALTERNATIVES:
1. Pass a resolution providing for the sale and issuance of Essential Corporate General
Obligation bonds not to exceed $5,885,000, General Obligation Refunding bonds not to
exceed $7,825,000, and Electric Revenue Refunding Bonds not to exceed $7,620,000.
2. Reject the bond sale resolution.
MANAGER'S RECOMMENDED ACTION:
The Manager's recommendation will be made at the Council meeting after the receipt and
analysis of bids.
COUNCIL ACTION: