HomeMy WebLinkAboutA032 - Council Action Form dated June 23, 2015, Item #12 ITEM # 12
DATE: 6-23-15
COUNCIL ACTION FORM
SUBJECT: PUBLIC HEARING AND NOTICE OF INTENT TO ISSUE $395,000 IN
ESSENTIAL CORPORATE PURPOSE GENERAL OBLIGATION
BONDS
BACKGROUND:
The FY 2015/16 budget includes a number of General Obligation (G.O.) Bond funded
capital improvements. A public hearing was held on March 3, 2015, and Council
authorized issuance of bonds and the levy of property taxes for debt to be issued. The
dollar amounts and corresponding property tax levy for the planned G.O. bond issue are
included as part of the FY 2015/16 budget. The projects included are listed below:
East Industrial Area Sewer Extension $ 2,000,000
ISU Research Park Improvements 2,938,990
Airport Terminal 943,000
Debt to be Abated by Other Revenues $ 5,881,990
Flood Mitigation $ 144,000
West Lincoln Way Improvements 450,000
Asphalt Street Improvements 1,300,000
Grand Avenue Extension 280,000
Concrete Pavement Improvements 1,100,000
Arterial Street Pavement Improvements 400,000
Downtown Street Pavement Improvements 800,000
Seal Coat Pavement Improvements 350,000
Bridge Rehabilitation Program 2,320,000
Airport Terminal Building 867,000
Subtotal Tax Supported Bonds $8,011,000
Refunding Bonds 5,950,000
Issuance Cost and Allowance for Premium 1,107,010
Grand Total — 2015/16 G.O. Issue $20,950,000
Council approval of the sale will be required at a later date. In addition to the G.O.
Bonds to fund scheduled capital improvement projects, staff identified a potential bond
refunding for bonds issued in 2006 and 2007 that may provide savings in debt service
costs. Even though Council held a public hearing and notice of intent on the sale of
bonds, the refunding sale will not go forward unless adequate savings are expected.
In the time since the budget was adopted and the public hearing was held for the bond
sale, bids were received on a current year G.O. bond-funded project to pave Grant
Avenue. The total cost for the Grant Avenue project is now estimated to be $468,812
above the $2,825,000 budgeted for the project. The cost of this project is shared
between developers and the City, with initial funding all coming from bond proceeds.
The developers' shares will be repaid through assessments.
The City share of the additional $468,812 cost is $107,827. Staff had identified savings
from other bond funded projects to cover this expense. The developers' share of the
$468,812 increase is $360,985. That portion will be funded by bond proceeds from the
upcoming issue and be repaid through assessments.
A public hearing is required to increase the issuance amount for the 2015 G.O. bonds
by $395,000, bringing the total authorized to $21 ,345,000. An additional $34,015 is
included in the public hearing for issuance costs and allowance for bids over par value
of the bonds.
As was noted above, the proposed bond issue includes $2,000,000 for the East
Industrial Area Sewer Extension. That project will extend sanitary sewer under the
Interstate and hasten the City's ability to serve eastern industrial growth. Council
previously indicated that the sewer extension should not occur until the City reached an
agreement with Central Iowa Water Association (CIWA) regarding water service
territory. City staff has held several productive meetings with CIWA staff in recent
weeks, and is optimistic that an agreement can be reached within the next two months.
That will allow the sewer extension project to move forward as planned. In the event
that an unexpected delay occurs in the sewer project, the $2,000,000 in GO funding
could be redirected to other priority projects in 2016/17. The 2016/17 bond issue would
then be decreased by the same amount.
ALTERNATIVES:
1. Adopt a resolution increasing the issuance of Essential Corporate Purpose General
Obligation bonds for 2015 by an amount not to exceed $395,000 and set the date of
public hearing for July 14, 2015.
2. Reject the resolution increasing the issuance of Essential Corporate Purpose
General Obligation Bonds. Rejection of the increase in Essential Corporate Purpose
Bonds will create a shortfall in funding for Grant Avenue paving. City staff would
need to work with Council to reprioritize other projects to allow funding for Grant
Avenue.
MANAGER'S RECOMMENDED ACTION:
Prior to the issuance of this debt, state law requires that a public hearing be held.
Therefore, it is the recommendation of the City Manager that the City Council adopt
Alternative No. 1, thereby adopting a resolution increasing the issuance of Essential
Corporate Purpose General Obligation bonds for 2015 by an amount not to exceed
$395,000, and setting the date of public hearing for July 14, 2015.
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