HomeMy WebLinkAboutA007 - Council Action Form dated March 9, 2021 ITEM # 30 & 31
DATE: 3/09/21
COUNCIL ACTION FORM
SUBJECT: PUBLIC HEARINGS AND NOTICE OF INTENT TO ISSUE $13,905,000
ESSENTIAL CORPORATE PURPOSE GENERAL OBLIGATION
BONDS, $11,760,000 GENERAL OBLIGATION REFUNDING BONDS,
AND $700,000 GENERAL CORPORATE PURPOSE GENERAL
OBLIGATION BONDS, AND ASSOCIATED TAX LEVY FOR DEBT
SERVICE
BACKGROUND:
The FY 2021/22 Budget includes several 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 is included as part of the FY 2021/22 budget.
The G.O. Bonds and debt service levy for the FY 2021/22 budget are based on projects
listed in the table below. Council authorization will be required at a later date to approve
the sale of the bonds. Bonds are expected to be issued shortly after the start of the new
fiscal year. In addition to the G.O. Bonds to fund capital improvement projects, staff has
identified a potential refunding for bonds issued in 2013 that will likely provide savings in
debt service costs. Though Council will be holding a public hearing and notice of
intent on the sale of bonds, the refunding sale will not go forward unless
adequate savings are expected.
Though the bonds will be combined in a single sale, the $700,000 to fund the plaza is a
general corporate purpose subject to a reverse referendum and a separate public
hearing is required. The remainder of the bond issue is qualified as essential corporate
purpose, not subject to reverse referendum and can be combined in a single public
hearing in amount not to exceed $25,665,000.
Please note that in addition to the amount to fund the $13,755,400 in G.O. Bond-funded
capital projects, the not-to-exceed amount for the issuance includes an $849,600
additional authorization to allow for issuance costs and the option to sell our bonds at a
premium over the par or face value of bonds. 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 public hearings and pre-levy resolution will be required at the time of the budget
approval to levy property taxes for the bonds not yet issued. The pre-levy amount is
included as part of the total debt service property tax levy and is $1,045,393 of the total
taxes levied for debt service at $10,007,684.
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The Capital Improvements Plan's 2021/22 G.O. Bond issue includes the following:
Arterial Street Pavement Improvements (N. Dakota/Ontario) $ 800,000
Collector Street Pavement Improvements (Hoover Avenue) 2,400,000
Concrete Pavement Improvements 3,500,000
Asphalt Street Pavement Improvements 2,500,000
Seal Coat Pavement Improvements 750,000
Downtown Pavement Improvements (Duff to Sherman Alley) 245,000
Intelligent Transportation System 160,400
Downtown Plaza -General Corporate Purpose- 700,000
Subtotal Tax Supported Bonds $11,055,400
East 131h Street Sanitary Sewer Extension (TIF Abated) 2,700,000
Subtotal TIF Abated Bonds 2,700,000
Total Bond Funded Projects $13,755,400
Refunding Bonds 11,760,000
Estimated Issuance Costs 849,600
Grand Total—2021/22 G.O. Issue $26,365,000
ALTERNATIVES:
1 . Authorize both the issuance of Essential Corporate Purpose General Obligation
Bonds and General Obligation Refunding Bonds in an amount not to exceed
$25,665,000 and the issuance of General Corporate Purpose General Obligation
Bonds in an amount not to exceed $700,000.
2. Reduce the FY 2021/22 property tax levy, and delay some, or all, of the capital
projects previously approved in the FY 2021/22 budget.
Rejection of the Essential Corporate Purpose Bonds will prevent the City from
completing the bond-funded projects reflected in the CIP. Rejection of the refunding
bonds will eliminate the opportunity to realize savings for existing bonds. Finally, the
rejection of the General Corporate Purpose bonds will delay the Downtown Plaza
project.
MANAGER'S RECOMMENDED ACTION:
Prior to the issuance of debt, state law requires that a public hearing be held and
associated pre-levy resolution be adopted. This is a required step in order to accomplish
the City 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 authorizing the issuance of both Essential Corporate Purpose
General Obligation Bonds and General Obligation Refunding Bonds in an amount not to
exceed $25,665,000 and the issuance of General Corporate Purpose General
Obligation Bonds in an amount not to exceed $700,000.
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