HomeMy WebLinkAboutA006 - Council Action Form dated March 5, 2019 ITEM # 11
DATE: 03-05-19
COUNCIL ACTION FORM
SUBJECT: PUBLIC HEARING AND NOTICE OF INTENT TO ISSUE $11,880,000
ESSENTIAL CORPORATE PURPOSE GENERAL OBLIGATION
BONDS, AND ASSOCIATED TAX LEVY FOR DEBT SERVICE
BACKGROUND:
The FY 2019/20 budget includes a number of General Obligation (G.O.) Bond-funded
capital improvements. A public hearing is required to authorize 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
2019/20 budget. City Council set March 5, 2019 as the date of the public hearing for
issuance of the bonds.
The G.O. Bonds and debt service levy for the FY 2019/20 budget are based on projects
listed in the table below. Council authorization will be required at a later date to
authorize the sale of the bonds. Bonds are expected to be issued shortly after the start
of the new fiscal year.
The Capital Improvements Plan's 2019/20 G.O. Bond issue includes the following:
City-Wide Radio System $1,240,000
Grand Avenue Extension 2,000,000
Campustown Improvements 1,000,000
Cherry Avenue Extension 300,000
Arterial Street Pavement Improvements 1,600,000
Bridge Rehabilitation 120,000
Concrete Pavement Improvements 2,800,000
Collector Street Pavement Improvements 500,000
Asphalt Street Improvements 1,000,000
Subtotal Tax Supported Bonds $ 10,560,000
City-Wide Radio System (Abated) 280,000
ISU Research Park Phase IV (TIF) 314,204
Subtotal Abated Bonds $594,204
Total Bond Funded Projects $11,154,204
Issuance Cost and Allowance for Premium 725,796
Grand Total—2019/20 G.O. Issue $ 11,880,000
Please note that in addition to the amount to fund the $11 ,154,204 in G.O. Bond-funded
capital projects, the not-to-exceed amount for the issuance includes a $725,796
additional authorization to allow for issuance costs and the option to sell our bonds at a
premium over the face value of bonds. This will allow the City to accept an optimum bid
with face value of bonds greater than the $11,154,204 needed to accomplish our
projects. In any case, debt will not be issued in an amount where debt service exceeds
the property tax levy included in the proposed budget. The proposed bond issue
complies with the Council approved debt policy.
ALTERNATIVES:
1 . Hold a public hearing to authorize the issuance of Essential Corporate Purpose
General Obligation Bonds in an amount not to exceed $11,880,000. After the public
hearing and approval of the bond issuance, a property tax pre-levy resolution to pay
principal and interest on the bonds is required.
2. Reject the action to approve the bond issue and levy of taxes. Rejection of the bond
issue and levy of taxes will prevent the City from completing the bond-funded
projects reflected in the CIP.
MANAGER'S RECOMMENDED ACTION:
Prior to the issuance of debt, state law requires that a public hearing be held and that a
pre-levy resolution be adopted for bonds not yet issued to be repaid from the property
tax levy. This is a required step in order to accomplish the Council's approved capital
improvements for the upcoming fiscal year.
Therefore, it is the recommendation of the City Manager that the City Council adopt
Alternative No. 1 thereby, after the public hearing, authorizing the issuance of Essential
Corporate Purpose General Obligation Bonds and in an amount not to exceed
$11 ,880,000.
2