Agenda - Economic Development Authority - 02/02/2005 - Special

Home

Case # 1 Lease Revenue Bonds for Municipal Center By: James E. Norman, City Administrator Heidi A. Nelson, Asst. City Administrator Background: At the most recent regular meeting of the EDA on January 12th, 2005, staff presented a case for consideration of lease revenue bonds for the proposed construction of a new municipal center within Town Center. Staff updated the EDA members regarding the status of project design and timeline for bonding and bidding for the project. EDA members voiced concerns regarding the City Council's commitment to going forward with the project and the impact of the bonding on the tax rate of the city. Councilmembers Elvig and Strommen directed staff to place the issue on a city council worksession (January 19th, 2005) at which the Council reviewed the Fiscal Impact Study and the budget for the project. Council directed staff to place a case on the next regular meeting of the City Council (January 25"~ 2005) to direct staff to proceed with completing the design of the project and directing the EDA to begin the process for the issuance of lease revenue bonds to finance the project. The motion adopted by City Council reads as follows: Motion to direct staff to proceed with the Municipal Center project on the Ramsey Town Ce~ter site. and to fitrther direct staff to make a fortnal request of the Economic Development Authority to i~itiate the bonding process Which will be a lease revenue bond, and further to direct staff to co~ttinue to provide clarification to fiscal impact revenue projections as to how they relate to the a~ticipated expenditures of the Ramsey Town Center Project and the Municipal Center Project, prior to bonding and bid letting of the project. Staff has enclosed the background information that has been reviewed by Council over the past several months for EDA review including a letter from Northland Securities that outlines the financing options for the project, as well as the Fiscal Impact Study that was prepared by HKG Group over the past year and revised with updated development projections and related project costs. The analysis for tax impact for various residential properties (100,000-300,000 value) for years 2005-2009 is also included with the Fiscal Impact Study. It should be noted that the cost of the project is still under review as there are several design and function decisions that will need to made by the Council prior to the finalization of the construction documents. The current estimated cost for the project is $16,316,659. With associated bonding costs, the Municipal Center bond is estimated at $17,200,000. Also of consideration is the portion of the parking ramp that will be attributed to Municipal Center parking, which if bonded with the Municipal Center project would add $1,920,000 to the project cost. These costs are detailed on the 'Future Levies for Debt' page of the Fiscal Impact Study and are incorporated into the analysis for tax rates. Observations The lease revenue bond method has been recommended by the City Council for financing of the municipal center project. Attached is a schedule showing the Redevelopment Plan schedule. EDA is requested to consider adoption of the Resolution Initiating Process for Adoption of Redevelopment Plan and Reimbursement Resolution. 1437103vl