Agenda - Council - 11/15/2022 - Special

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CC Special Session Meeting Date: 11/15/2022 By: Diana Lund, Finance Title: Adopt Resolution #22-259 Providing for the Issuance and Sale of $12,075,000 General Obligation Street Reconstruction Bonds, Series 2022A and Levying a Tax for the Payment Thereof 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 streets. The average debt needed was determined to be approximately $12M. The city is looking to issue General Obligation Street Reconstruction Bonds. There are requirements that need to be followed if the City desires to issue Road Reconstruction Plan Bonds. The requirements are: 1. A Five -Year Street Reconstruction and Overlay Plan (SROP) must be prepared. The City's five-year plan as presented, is based on the highest priority street projects that Engineering had outlined in their Long -Term Street Maintenance Program and which are also outlined in the City's 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. Public Hearing was held on October 11, 2022. 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 2/3 vote of its membership present. Like a Capital Improvement bond, the Street Reconstruction bond is not required to have a referendum, but a reverse referendum is allowable. If a petition bearing the signatures of at least 5 percent of the votes cast in the last general election is filed with the City Clerk within 30 days after the public hearing regarding the bonds (October 11, 2022), the bonds may not be issued unless approved by voters. No petition was filed by the November 10, 2022, deadline.