Agenda - Council - 10/11/2022 - Laserfiche WebLink

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CC Regular Session Meeting Date: 10/ 11 /2022 By: Diana Lund, Finance Information 6. 1. Title: PUBLIC HEARING: Res. #22-237 Adopting a Street Reconstruction and Overlay Plan and Issuance of General Obligation Street Reconstruction Bonds and Res. #22-238 Providing Sale of $12,075,000 General Obligation Street Reconstruction Bonds, Series 2022A Purpose/Background: Purpose: To provide funding for street reconstructions and bituminous overlays via the issuance of Street Reconstruction Plan Bonds. Background: Over the past several years, much discussion has taken place over the financing of street improvements. These needed improvements: Overlays and Reconstructions are based on the 60-year Long -Term Street Maintenance Program that the engineering department had compiled on all of the city's streets based on a PASER rating (the lower the PASER rating, the worse the road). Street Reconstruction Bubble (From Public works Committee Meetings June 21, 2022 & July 19, 2022) Between 1975 and 1985 approximately 40-percent of all City streets were constructed. At the time these streets were constructed their anticipated useful design life was 40-years, after which reconstruction would be required. These streets have all now either reached, or are nearing, the end of their useful lives. This means approximately 40-percent of City streets need to be reconstructed now or in the immediate future. And while it has generally been known for a decade or more that this "street reconstruction bubble" was approaching, it has become even more apparent this year that current Pavement Management Program funding levels need to be increased to acceptably maintain the condition of City streets. Based on the Engineer's estimate, these projects totaled approximately $12.8M. Included in the draft document of the City's 2023-2032 Capital Improvement Plan is over $37 million of Pavement Management Improvement Projects including the $12.8M projects noted above. During the 2023 budget city council worksessions, it was the consensus of council to "front -load" funding these projects due to the large amount of streets that are in need of repair. The agreement was to not only levy the annual pavement management levy that is approximately $1.7 million but also to issue debt so that there would be funding available to get ahead on improving a major section of these roads over the next three to four years. The average debt needed was determined to be approximately $12M. The annual debt service levy on the property tax would be approximately $1.145M for 15 years. The $1.145M debt levy for payable 2023 was included in the Preliminary 2023 Property tax levy that was adopted by City Council on September 27. The city is looking to issue General Obligation Street Reconstruction Bonds. There are requirements that need to be followed when issuing Street Reconstruction Plan Bonds. The requirements are: 1. A Five -Year Street Reconstruction and Overlay Plan (SROP) must be prepared. The City's five year as presented, is based on the highest priority street projects that Engineering has outlined in the City's draft 2023-2032 Capital Improvement Plan (CIP). 2. City Council must hold a public hearing on the issuance of the bonds and Street Reconstruction and Overlay Plan. The public hearing request is the first step of the bonding process that needs to be undertaken for financing the street improvements with is what is being requested at tonight's meeting. The major requirement to allow the city to issue this debt is that the City Council must approve the sale of the street reconstruction bonds by at least two-thirds vote of the membership present (need 4 approval votes if 6 members present; 5 votes if 7 members present).