HomeMy WebLinkAboutA001 - Memo on Indoor Aquatic Center Financing Options dated July 27, 2021 CITY Cr-
Am;xw� A m e s MEMO
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Caring People*Quality Programs*Exceptional Service Item No. 32
To: Mayor and City Council
From: Steven L. Schainker, City Manager
Date: July 27, 2021
Subject: Reinvestment District Financing Option Direction
On July 13, 2021, the City Council received a report outlining the status of the
Reinvestment District Projects, including the Indoor Aquatics Center, the Lincoln Way
Redevelopment Project (Clark to Kellogg), the Downtown Plaza, and the Onondaga
Properties Development (330 51h Street/412 Burnett).
This report noted that to move forward with the Reinvestment District projects,the first
major decision for the City Council is to determine which of the three financing options
for the Aquatics Center should be pursued. Therefore, the Council directed staff at
that meeting to place on the next agenda a discussion regarding the financing
options for the Aquatic Center.
FINANCING OPTIONS:
The City Council has three principal options to finance the project. It should be
emphasized that under Options I and 2, the City would issue $21,200,000 of the
$31,200,000 total project costs in General Obligation debt. This is a revised total based
on applying a 15%escalation factor as recommended by RDG. ($27,494,000 X 13.50%
- 10,000,000 in donations) However, it is currently anticipated that the net impact to
taxpayers would be $11,200,000, after accounting for the $10,000,000 of Reinvestment
District funding. These three options for the Council to consider consist o£
1. Urban Renewal
Since the proposed site of the Aquatics Center will be situated within a
designated Urban Renewal Area, under the Iowa Code the $21,200,000 in
G.O. Bonds issued for this project can be issued as an Essential Corporate
Purpose.These bonds can be issued by the City Council following a hearing,
without holding a public referendum to authorize the sale of the bonds.
However, a referendum can be required if the Council receives a valid
petition requesting a vote. The petition must contain signatures equaling at
least 10% (3,189) of the number who voted in the last regular election. The
petition may be signed by any person residing in Ames who is eligible to vote at
City Manager's Office 515.239.5101 main 515 Clark Ave.
0 515.239.5142 fax Ames,IA 50010
www.CityofAmes.org
the time they sign the petition (petition signers need not be registered to vote,
but simply be eligible to register). The petition must be filed with the City Clerk
prior to the conclusion of the public hearing authorizing the issuance of the debt.
A minimum ten-day notice is required prior to the hearing. This option is what
the staff has referred to as a"Reverse Referendum."
2. Referendum Election
The City Council can decide to bring forward for a public referendum a
question to authorize $21,200,000 in G.O. Bonds. This referendum would
require a 60% approval from voters. State law allows a vote at a Special
Election on September 14,2021 or March 1,2022,or at the General Election
on November 2, 2021. Given the amount of time needed to adequately
educate the public regarding the project, the earliest a referendum should
be held is November 2021.
In order to place this issue before the voters, a Council resolution must be
submitted to the Story County Auditor at least 46 days in advance of the election.
The last regular scheduled City Council meeting 46 days before November 2 is
September 14.
To educate the public for the vote, an informational campaign would be
organized and would require funding from the City Council. Issues that should
addressed in the informational campaign include: the features contained in the
Aquatics Center,the location,operating costs,user fees,and the unusual funding
situation whereby it would be estimated that property owners would only have
to pay taxes of$11,200,000 of a total project cost of$31,200,000.
3. Hybrid Urban Renewal and Referendum Election
Under this option, the Council would separately approve $10,000,000 in
Essential Corporate Purpose G.O. bonds within the Urban Renewal Area
(subject to a reverse referendum) and authorize a $11,200,000 G.O. Bond
referendum election. Although the same total of G.O. Bonds would be issued, a
possible rationale to bifurcate these bond issuances is to isolate the benefit of the
Reinvestment District revenue.
COST ESTIMATE ADJUSTMENTS:
With any of the three options highlighted above,the City Council could reduce the
amount needed to be financed by the taxpayers by eliminating the second floor of
the Aquatics Center which is intended to house the walking track and exercise
area. This approach would reduce the gap from $11,200,000 to $6,511,000.
It should be emphasized that the above estimates will no doubt be adjusted again
when the City receives the IDOT's appraisal for the site and a more up to date cost
estimate is provided by a construction estimating company.
CITY COUNCIL DIRECTION:
City Council members indicated at the July 13th meeting, that a decision would be
made at this meeting regarding the desired financing option for the G.O. Bond
funding for the indoor aquatic center project.