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Backgr!lun~d: 1992 City of Ramsey Street Maintenance Program By: Sandra Ashley Helling, Finance Officer Case Our City Engineer submitted the Report on Feasibility Study for 1992 Street Maintenance Program to Coun¢'.il ~ith the January 28, 1992 agenda packet. This evening Steve Jankowski is meeting with the [members of the Road and Bridge Committee for their final review of this report. It is a case on the Budget Committee agenda this evening; if the program moves ahead as proposed, the City's sh~re ~f the cost is estimated at $52,964. [ Within ~-ityiCode Subdivision 1., Section 4.50, it is stated that for residential (non-M.S.A.) streets, 5~0%i of the cost for reconstruction/overlays on an existing bituminous street shall be assessed~to [he property owner with the remaining 50% assessed to the City. For 1992 this assessmegt t(~ the City will be approximately $52,964. Ordinan~e ~0-3 which provided for the City s partaclpatmn in the cost of overlays and sealcoatmg became e!ffeot~ve for 1990 projects. While the City funding source for th~s cost was not addressed within tl~e o~:dinance, the City has funded these costs by inclusion in a bond issue wherein an annual ta~ le/gy for the pro-rated principal and interest is made. This debt service levy is outside of the levy llmiti Our rec~nt :bond issue Series 1992B ($620,000 General Obligation) included the overlay/s~alqoating projects completed in 1990 and 1991. These projects totaled $87,900 before bond int~esti issuance costs, etc. were applied. Due to the very favorable interest realized on this issue (4.714~% net) the debt service levy will total $40,457 principal and interest or an average annual de[bt s~rvice levy of $4,495 for nine years. The interest savings on the non-city cost portion of the issue s{rved to reduce this debt service levy. Observations: As the Cily s;hare of the 1992 Street Maintenance Program will be included in a future bond issue, the interelst ra~te and term of the bond is undetermined. But as we have a seven-year cycle for the street program, after the seventh year, the City will incur debt service payments for seven years of street pr°~rar~s. For purposes of discussion, the following assumptions are made: 1 .~ All City residential streets are served by the street program once every seven (7) years. The City's share of the annual program cost will be $53,000 3.1 The City will have annual bond issues that include the City's share of the current year street program. 4., Future Bond issues will have a net interest rate of 5.5%, and a term of seven (7) years. Based on thel above assumptions, the 1992 Street Program debt service payment will average $8,880 annu~ly. As we complete year seven of the program, all things being constant, the City will have :inngal street program debt service payments (principal and interest) of $62,160. Although Che ~lebt service levy is outside of the current general operations levy limit ($1,531,174), the $62,1{[0 w xtld effectively raise our current levy to taxpayers by 4%. · 4