10.F.
City Council Meeting - FINAL
- Meeting Date:
- 08/15/2017
- From:
- Rick Tadder, Management Services Director
Information
TITLE:
Consideration and Adoption of Resolution No. 2017-25: Resolution of the City Council of the City of Flagstaff, Arizona, declaring, for the purposes of Section 1.150-2 of the Federal Treasury Regulations, official intent to be reimbursed in connection with certain capital expenditures relating to Road Repair and Street Safety and Core Services Maintenance Facility, and establishing an effective date.
STAFF RECOMMENDED ACTION:
1) Read Resolution No.2017-25 by title only
2) City Clerk reads Resolution No. 2017-25 by title only (if approved above)
3) Adopt Resolution No. 2017-25
2) City Clerk reads Resolution No. 2017-25 by title only (if approved above)
3) Adopt Resolution No. 2017-25
Executive Summary:
This resolution will allow the City to reimburse itself for expenditures made on voter approved projects that are currently under construction in advance of issuing the voter approved debt (bonds) for the projects. Federal regulations provide that the City may reimburse itself for expenditures incurred prior to the issuing of debt so long as this type resolution is adopted. Without the resolution, only City expenditures incurred after issuance of debt would be allowed.
Financial Impact:
City expenditures to be reimbursed with debt obligation are budgeted in FY 2018 for the Road Repair and Street Safety projects (046-05-116-varies) as well as the Core Services Maintenance Facility construction (406-09-424-3276-3). There is no cost to approving this resolution.
Policy Impact:
None
Connection to Council Goal, Regional Plan and/or TeamFlagstaff Strategic Plan:
Council Goals:
Transportation and Other Public Infrastructure-Deliver quality community assets and continue to advocate and implement a highly performing multi-modal transportation system.
Regional Plan:
Goal T.11. Build and sustain public support for the implementation of transportation planning goals and policies, including the financial underpinnings of the Plan, by actively seeking meaningful community involvement.
Transportation and Other Public Infrastructure-Deliver quality community assets and continue to advocate and implement a highly performing multi-modal transportation system.
Regional Plan:
Goal T.11. Build and sustain public support for the implementation of transportation planning goals and policies, including the financial underpinnings of the Plan, by actively seeking meaningful community involvement.
Goal PF.2. Provide sustainable and equitable public facilities, services, and infrastructure systems in an efficient and effective manner to serve all population areas and demographics.
Has There Been Previous Council Decision on This:
Yes. The City Council approved contracts for Road Repair and Street Safety projects and the Core Services Maintenance Facility earlier this calendar year, and these are voter approved projects.
Options and Alternatives:
Approve the Reimbursement Resolution: This is the best option to allow the City the greatest flexibility to issue debt when it is most advantageous while allowing construction expenditures to occur.
Do not approve the Reimbursement Resolution: If not approved, staff will need to quickly bring back a debt issuing ordinance for Council and would issue debt at the earliest possible time.
Do not approve the Reimbursement Resolution: If not approved, staff will need to quickly bring back a debt issuing ordinance for Council and would issue debt at the earliest possible time.
Background and History:
Core Services Maintenance Facility
In October, 2007, staff initiated a discussion with the City Council regarding the need for a new Public Works Maintenance Facility (now Core Services Maintenance Facility). The consensus of Council was that there is a compelling need to research and develop a plan to pursue a new facility. At that time, Council approved a $2.50 per ton tipping fee at the landfill, with a one year sunset, to begin collecting funds for a capital reserve for Environmental Services’ (now Solid Waste) proportionate share of debt service for a new facility. Staff was to provide to Council key components for a facility including facility location, property size, public involvement, and funding options.
In November, 2008, staff provided Council with a list of alternative site locations, facility space needs, and a conceptual layout plan. Staff requested a renewal of the fee until the project could be completed. Council approved the extension of the $2.50 per ton tipping fee for another year instructing staff to produce 1) a property/location selection; 2) conceptual site plan development; and 3) preliminary cost estimate.
In November, 2009, progress had been made on the Core Services Maintenance Facility. As of that date, staff had 1) completed a property/location selection for the facility, identified the space needs for each Section of the Division, selected a consultant, which Council approved at its August 18, 2009 meeting, who now had the information and was working on the 2) conceptual site plan development which would provide us with the 3) preliminary cost estimate. Council approved the extension of the $2.50 per ton tipping fee until May, 2010 in order to see and decide on a completed conceptual site plan and preliminary cost estimate for the Facility.
In May, 2010, Council extended the collection of the fee for an additional year until it was decided if the Core Services Maintenance Facility would be selected for the November bond election and, if so, the outcome of that election. The $42,000,000 Facility was selected for the bond election but failed and the tipping fee expired in May, 2011.
Staff continued to develop alternative for construction of the Core Services Maintenance Facility. Council agreed to request voter authorization for $14,000,000 in general obligation bonds. The plans continued to include funding of the project from the tipping fee. In November 2012, voters approved $14 million in general obligation bonds and construction of a Core Services Maintenance Facility.
Upon a successful bond election, staff developed options for the Core Services Maintenance Facility. In July 2014, by Ordinance 2014-19, Council approved the reinstatement of the $2.50 per ton tipping fee to help fund and finance the project. Construction of the facility began in FY 2017 and is estimated to be completed in FY 2018. Staff will be issuing approximately $3.7 million in debt with the primary repayment source being the tipping fee.
Road Repair and Street Safety
On November 4, 2014, a general election was held by the City of Flagstaff whereby the citizens authorized the Road Repair and Street Safety Initiative. This is a 0.33 percent (%) transaction privilege tax ("sales tax") for a 20 year period to be used exclusively to pay for street improvements and the ongoing preservation of street condition inside the City limits. Voters authorized issuance of $20,000,000 in debt (bonds) to help accelerate the work program in the first seven years. The City has issued $10,000,000 in debt in August 2016. We are planning on issuing the remaining $10,000,000 in debt during this Fiscal Year. The debt service payments will be made from the Road Repair and Street Safety sales tax revenues.
In October, 2007, staff initiated a discussion with the City Council regarding the need for a new Public Works Maintenance Facility (now Core Services Maintenance Facility). The consensus of Council was that there is a compelling need to research and develop a plan to pursue a new facility. At that time, Council approved a $2.50 per ton tipping fee at the landfill, with a one year sunset, to begin collecting funds for a capital reserve for Environmental Services’ (now Solid Waste) proportionate share of debt service for a new facility. Staff was to provide to Council key components for a facility including facility location, property size, public involvement, and funding options.
In November, 2008, staff provided Council with a list of alternative site locations, facility space needs, and a conceptual layout plan. Staff requested a renewal of the fee until the project could be completed. Council approved the extension of the $2.50 per ton tipping fee for another year instructing staff to produce 1) a property/location selection; 2) conceptual site plan development; and 3) preliminary cost estimate.
In November, 2009, progress had been made on the Core Services Maintenance Facility. As of that date, staff had 1) completed a property/location selection for the facility, identified the space needs for each Section of the Division, selected a consultant, which Council approved at its August 18, 2009 meeting, who now had the information and was working on the 2) conceptual site plan development which would provide us with the 3) preliminary cost estimate. Council approved the extension of the $2.50 per ton tipping fee until May, 2010 in order to see and decide on a completed conceptual site plan and preliminary cost estimate for the Facility.
In May, 2010, Council extended the collection of the fee for an additional year until it was decided if the Core Services Maintenance Facility would be selected for the November bond election and, if so, the outcome of that election. The $42,000,000 Facility was selected for the bond election but failed and the tipping fee expired in May, 2011.
Staff continued to develop alternative for construction of the Core Services Maintenance Facility. Council agreed to request voter authorization for $14,000,000 in general obligation bonds. The plans continued to include funding of the project from the tipping fee. In November 2012, voters approved $14 million in general obligation bonds and construction of a Core Services Maintenance Facility.
Upon a successful bond election, staff developed options for the Core Services Maintenance Facility. In July 2014, by Ordinance 2014-19, Council approved the reinstatement of the $2.50 per ton tipping fee to help fund and finance the project. Construction of the facility began in FY 2017 and is estimated to be completed in FY 2018. Staff will be issuing approximately $3.7 million in debt with the primary repayment source being the tipping fee.
Road Repair and Street Safety
On November 4, 2014, a general election was held by the City of Flagstaff whereby the citizens authorized the Road Repair and Street Safety Initiative. This is a 0.33 percent (%) transaction privilege tax ("sales tax") for a 20 year period to be used exclusively to pay for street improvements and the ongoing preservation of street condition inside the City limits. Voters authorized issuance of $20,000,000 in debt (bonds) to help accelerate the work program in the first seven years. The City has issued $10,000,000 in debt in August 2016. We are planning on issuing the remaining $10,000,000 in debt during this Fiscal Year. The debt service payments will be made from the Road Repair and Street Safety sales tax revenues.
Key Considerations:
IRS regulations are very specific as to what capital expenditures are eligible for reimbursement. These expenditures must be any cost of a type that is properly chargeable to a capital account (or would be or chargeable with a proper election) under general federal income tax guidelines.
Expanded Options and Alternatives:
Inform: This resolution informs the community of its intent to reimburse construction projects with future debt issuances.
Empower: The Citizens of Flagstaff approved the construction projects at the November 2012 election for the Core Services Maintenance Facility and the November 2014 election for the Road Repair and Street Safety projects.
Empower: The Citizens of Flagstaff approved the construction projects at the November 2012 election for the Core Services Maintenance Facility and the November 2014 election for the Road Repair and Street Safety projects.