HomeMy WebLinkAboutA001 - Council Action Form dated March 10, 2026ITEM #:28
DATE:03-10-26
DEPT:FIN
SUBJECT:RESOLUTION TO FIX A DATE FOR A PUBLIC HEARING ON PROPOSAL
TO ENTER INTO A GENERAL OBLIGATION LOAN AGREEMENT AND TO
BORROW MONEY THEREUNDER IN A PRINCIPAL AMOUNT NOT TO
EXCEED $17,375,000
COUNCIL ACTION FORM
BACKGROUND:
The FY 2026/27 Budget provides funding for a number of capital improvement projects to be
financed through the issuance of General Obligation (G.O.) Bonds. Pursuant to Iowa law,
authorization of the bonds requires a public hearing to approve both the issuance of the debt
and the levy of property taxes necessary to pay principal and interest. The proposed bond
proceeds and corresponding debt service levy have been incorporated into the FY 2026/27
recommended budget.
The proposed G.O. bond issuance is based on the capital projects identified in the table below
and included in the FY 2026/27 Capital Improvements Plan (CIP). Approval of this action
authorizes issuance up to the not-to-exceed amount; Council will be asked at a later date to
approve the final terms and sale of the bonds. Issuance is anticipated shortly after the
beginning of the new fiscal year.
The proposed not-to-exceed authorization includes $16,317,006 to fund capital projects
approved in the FY 2026/27 CIP. In addition to direct project funding, the not-to-exceed
amount includes $1,057,994 to cover estimated issuance costs and to provide structural
flexibility, including the potential to sell bonds at a premium should market conditions warrant.
Regardless of the final structure, debt will not be issued in an amount that causes annual debt
service to exceed the property tax levy included in the adopted budget.
It should also be noted that the adjusted FY 2025/26 budget and the recommended FY
2026/27 budget include a combined $22,006,730 to support development of the Resource
Recovery and Recycling Campus (R3C). Given that the project remains in the early stages
of development, staff believes it is prudent to defer bond authorization until the R3C's
construction schedule is better defined and a comprehensive financing plan has been
developed.
Additionally, because the City has already received authorization through a public
referendum for the relocation of Fire Station #2, associated costs for this project are
not part of this proposed authorization.
As part of the proceedings on March 24, 2026, City Council will be asked to conduct the
required public hearings and approve a pre-levy resolution to authorize the levy of property
taxes for bonds expected to be issued in FY 2026/27. The pre-levy amount associated with
the FY 2026/27 projects is $1,828,463 and is included within the total FY 2026/27 debt
service property tax levy of $13,360,015 for all outstanding General Obligation debt.
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The FY 2026/27 Capital Improvements Plan G.O. Bond issuance includes the following
projects:
Asphalt Street Pavement Improvements 2,340,000
Arterial Street Pavement Improvements 1,260,000
CyRide Route Pavement Improvements 3,800,000
Concrete Pavement Improvements 3,300,000
Seal Coat Street Pavement Improvements 900,000
Collector Street Pavement Improvements 2,800,000
Freel Drive Paving 975,000
Intelligent Transportation System 178,756
Airport Facility Improvements 623,250
Airport Entryway Improvements 140,000
Subtotal Tax Supported Bonds $ 16,317,006
Estimated Issuance Costs 1,057,994
Grand Total 2025/26 G.O. Bond Issuance $ 17,375,000
ALTERNATIVES:
1. Set March 24, 2026, as the date of public hearing to authorize the issuance of Essential
Corporate Purpose General Obligation Bonds in an amount not to exceed $17,375,000.
After the hearing, the City Council, at the same meeting on March 24th, can authorize
the sale and associated pre-levy resolution. The sale actually will occur at a time of the
City's choosing typically in the Fall.
2. Reject or delay the public hearings, reduce the FY 2026/27 property tax levy, and delay
the capital projects. Rejection of the Bonds will prevent the City from completing the
bond-funded projects reflected in the CIP.
CITY 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
y e a r. Therefore, it is the recommendation of the City Manager that the City Council adopt
Alternative No. 1, as described above.
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