HomeMy WebLinkAboutA019 - Council Action Form dated August 28, 2012 ITEM # 25
DATE: 08-28-12
COUNCIL ACTION FORM
SUBJECT: SALE AND ISSUANCE OF ESSENTIAL CORPORATE PURPOSE
GENERAL OBLIGATION BONDS SERIES 2012 ISSUE IN AN AMOUNT
NOT TO EXCEED $13,215,000
BACKGROUND:
The 2012/13 budget included a number of General Obligation Bond funded capital
improvement projects. In preparation to issue these bonds, all projects were reviewed
and issuance amounts adjusted based on the timing of projects and current price
estimates.
Projects to be funded by this issue include the following:
201212013 CIP G.O. Bond Issue:
Woodview Drive Water& Sewer Project (Assessment Project*) $ 357,000
Extension of Utilities North (Abated by Water and Sewer) 1,401,000
Flood Response & Mitigation Projects 820,000
Collector Street Pavement Improvements 850,000
Asphalt Street Reconstruction Program 928,000
CyRide Route Pavement Improvements 1,420,000
Arterial Street Pavement Improvements 219,000
Concrete Pavement Improvements 600,000
Downtown Street Improvements 950,000
Asphalt/Seal Coat Street Rehabilitation 620,500
Squaw Creek Bridge 400,000
Subtotal Debt Issue $ 8,565,500
Library Expansion/Renovation (Approved by Referendum) 4,500,000
Subtotal $ 13,065,500
Issuance Cost/Allowance for Sale at Premium 149,500
Total Debt Issue $ 13,215,000
On the morning of August 28, 2012, the City will accept bids for the bonds per the terms
of our offering statement. The bids will be evaluated by our financial advisor, Public
Financial Management, by the City's bond counsel, and by City staff to recommend
award to the bidder with the lowest cost. A report of bids will be provided to Council at
the August 28th meeting. Council may then adopt a resolution accepting bids and
authorizing that the sale of bonds be awarded to the chosen bidder.
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ALTERNATIVES:
1. The City Council can adopt a resolution accepting bids and authorizing the sale and
issuance of Essential Corporate Purpose General Obligation Bonds in an amount
not to exceed $13,215,000.
2. The Council can reject the bond sale resolution and delay the capital projects.
MANAGER'S RECOMMENDED ACTION:
Issuance of these bonds is necessary in order to accomplish the City's approved capital
improvements during this fiscal year.
Therefore, it is the recommendation of the City Manager that the City Council accept
Alternative No. 1, thereby adopting a resolution accepting bids and authorizing the sale
and issuance of Essential Corporate Purpose General Obligation Bonds in an amount
not to exceed $13,215,000.
The City Council will remember that the proposed bond issue includes $357,000
to fund the Woodview Subdivision infrastructure projects that are planned to be
paid back from special assessment payments from benefitted property owners.
Unfortunately, as of this date the Public Works staff is still in the process of
securing signatures from Woodview Drive residents for the assessment
agreement to install water and sewer. Out of the 11 property owners, six have
signed the assessment agreement.
Staff is hopeful that all the signatures will be collected soon, since the property
owners are eager to get the project underway. However, a single mortgage lender
that has an interest in several properties did not want to be second in line if the
property owner defaulted on their mortgage. The City Attorney's Office has been
working with the lenders to assure them that this is a value add to the property.
However, given this situation there is some risk to the City if for some reason the
remaining residents do not enter into the assessment agreement; since even
though the project will not proceed, the City will have already sold bonds to fund
the project. This will mean that the City will be obligated to pay for the portion of
debt service related to the Woodview Drive project, even though property taxes
were not assessed to those properties for this project. The anticipated cost to the
City during FY 2012/13 would be $34,800 paid from the debt service fund balance.
Should that happen, this $357,000 in bond proceeds could be used for other
purposes specified on the bond prospectus (e.g., street projects). The City would
then be able to reduce the planned FY 2013/14 bond sale to offset the debt that
was issued for the Woodview Drive project but was not used for that purpose.
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