Agenda - Council - 06/23/1981 - Laserfiche WebLink

Home

(IN OTHER WORDS, THE COUNCIL MUST REVIEW THE FINANCIAL SELF-SUFFI- CIENCY OF ALL PROPOSALS FOR PUBLICLY OWNED OR OPERATED SOLID AND HAZARDOUS WASTE FACILITIES. THE COUNCIL MUST ALSO FIND THAT ADEQUATE MARKETS EXIST AND THAT OPERATING AND CAPITAL COSTS WILL BE COVERED FOR PROPOSED RESOURCE RECOVERY FACILITIES TO BE OWNED BY PUBLIC AGENCIES OR PRIVATE PARTIES THAT ARE SECURED BY "OBLIGATIONS PLEDGING THE FULL FAITH AND CREDIT OR TAXING POWERS OF A CITY . · .") Since methods of financing the capital and operating costs of (PRIVATE) facilities can vary considerably, the Council will need to examine carefully the financial circumstances of (PRIVATE) facility propo- sals to determine whether a financially self-sufficiency review is necessary or not. (THEN T~E COUNCIL CAN DETERMINE WHETHER THE ABOVE OBLIG--~TIONS ARE pRESENT AND WHETHER THE COUNCIL IS LEGALLY REQUIRED TO COMPLETE THE FINDINGS UNDER SECTION 473.823, SUBDIVISION 3. TO MAKE THESE AND OTHER DETERMINATIONS) The Council will need to determine 1) whether publicly granted funds are used to pay the capital costs, 2) whether obligations of a public entity are issued to finance capital costs, or 3) whether a public subsidy, contract obligation with a governmental unit, or other obligation is used to pay or ensure the operating and maintenance costs of the proposed facility. The financial mechanisms by which public monies, including property taxes, are to be used to support a proposed waste facility must be weighed. Some financial mechanisms directly obligate property tax revenues; others do so indirectly. When capital costs are paid in part from sources other than property taxes, such as corporate earnings, private stock or bond sales, and state or federal grants, property tax risks are not as great. This must be recognized. A public financial obligation to pay capital costs for a waste facil- ity can result from a variety of payment mechanisms, the most common of which is the publicly secured tax-exempt bond. In Minnesota, counties, school districts and municipalities issue the majority of tax-exempt bonds. Other governmental entities, including metropol- itan commissions, housing and development authorities, and port authorities, are also authorized to issue tax-exempt bonds. A variety of publicly issued tax-exempt bonds can be used to finance a waste facility's capital costs. General obligation bonds pledge the full faith and credit and taxing powers of the issuer, and property taxes are used to pay annual debt service costs. General obligation bonds may be issued to mature over a period not exceeding 30 years from the date of issuance. The capital market evaluates the credit worthiness of the local government sponsoring such bonds, but does not evaluate the technical and marketing risk of a particular project since bond payment is not contingent on project success. The (1976 METROPOLITAN SOLID) Waste Management Act specifically enables Metropolitan Area counties to issue general obligation bonds for capital formation in connection with solid waste facilities, including resource recovery facilities, without an election. The Act also authorizes the Council to issue ~eneral obligation b~nds ~o provide t__qo count-~ for the ~quisi~ion of sanitary landfill sites.