Agenda - Council - 12/08/2020 - Laserfiche WebLink

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CC Regular Session Meeting Date: 12/08/2020 By: Diana Lund, Finance Information Title: Adopt Resolution #20-297 Providing for the Issuance and Sale of $9.065M General Obligation Capital Improvement Plan Bonds, Series 2020A and Levying a tax for the Payment Thereof Purpose/Background: Purpose: To provide a funding mechanism for the construction of the Public Works Campus. 7. 1. Background: In 2003, the Minnesota State Legislature adopted a statute known as the "CIP Act" that allows cities to issue municipal bonds under a capital improvement plan without the usual referendum requirement (CIP bonds are subject to a reverse referendum). Whereby, if a petition (filed with the City Clerk) is signed by voters equal to at least five percent of the votes cast in the City in the last general election within 30 days after the public hearing regarding the bonds (October 27, 2020), the bonds may not be issued unless approved by the voters. No petition was filed by the November 26, 2020 deadline. The "CIP Act" applies to capital improvements consisting of city halls, public works and public safety facilities. The City used the CIP bonding method when it refinanced its Fire Station #1 bonds in 2004, refinanced the Municipal Center debt in 2012 and financed Fire Station #2 in 2015. The Public Works Campus project has been included in the city's regular Capital Improvement Plan (CIP) since 2006 with its funding source listed as the issuance of CIP debt (General Obligation debt) and several other sources noted under funding below. IIf the CIP calls for funding of the project to be provided by the issuance of General Obligation bonds, additional procedures must be followed: Council must hold a public hearing regarding the issuance of the bonds and the CIP bonded project -Public Works Campus. When a city issues GO CIP debt, they are required to have what is termed a five-year CIP adopted as part of this process that outlines the project to be funded. The five year CIP was adopted at the City Council meeting of October 27, 2020. The CIP Plan for Years 2020 through 2024 that was adopted October 27th is different from the City's entire 2020-2029 CIP document that was adopted in December 2020. The City's entire CIP includes all projects within the city: Buildings, Water, Sewer, Streets, that are proposed to be constructed over the 10-year time frame whereas the Five -Year CIP related to the GO CIP bonding has to include a special narration outlining only those projects that are to be funded via CIP debt. At is regular meeting of October 27, 2020 City Council passed resolution #20-253 authorizing the issuance of GO Capital Improvement Plan Bonds for the Public Works Campus in an amount not to exceed $10,000,000 (as outlined in the Five -Year) with a scheduled sale date of December 8, 2020. Stacie Kvilvang from Ehler's and Associates, the city's financial consultant, will present the bid results on the night of December 8, 2020, as the GO Capital Improvement Plan Bonds will be bid on earlier that morning by prospective bond buyers. The total bonded sale request is for $9,065,000 which is reduction of $870,000 from the original request on October 27 due to a significant reduction in construction costs than was previously estimated. There is a great possibility that this bond will be sold at a premium as is being dictated by current market conditions. If sold at a premium, the principal amount of debt will be reduced. As noted in the levy adoption that will be held previous to this agenda item, if the bond is sold at a premium, the respective debt service levy will be reduced.