Adopt Resolution # 23-268 Providing for the Issuance and Sale of $8,315,000 General Obligation (GO) Bonds, Series 2023A and Levying a Tax for the Payment Thereof

Purpose:  To provide funding for $7M of COR Improvements consisting of:  COR tree clearing, Hy 10/Ferret Street Reconstruction, COR mass grading and COR infrastructure plans and specs for Zeolite Street, Ramsey Parkway and Center Street and approximately $1.45M for capital equipment as outlined in the 2024 General Fund Budget.

Background:

A COR analysis Update was prepared by Bolton and Menk, Inc.  Included in this analysis and confirmed by City Council were the following priorities: 

• Grading, lining and installing storm sewer for the Waterfront stormwater pond
• Filling low-lying COR properties using fill from the Waterfront pond excavation
• Design and prepare plans and specifications for Zeolite Street, north end of Center Street and Ramsey Parkway between Sunwood Drive roundabout and Willemite Street.

All items listed above have been approved by City Council at various dates in 2023 with the funding stated to be the issuance of Tax Increment bonds in the estimated amount of $7,000,000.  

After much discussion in regards to the proposed 2024 General Fund Budget and respective tax levies, it was determined that the unfunded capital equipment items would be funded via the issuance of capital equipment debt.  The total amount of financing needed was $1.453Million.

One bond will be issued which will incorporate the funding needs as outlined above in the amount of $8,315,000 which includes estimated underwriter and issuance costs.   The Tax Increment side of the bond will be for a period of 15 years and the Capital Equipment will be for a term of 10 years. 

At its regular meeting of September 26, 2023 City Council passed resolution #23-231 Providing for the Sale of General Obligation Bonds.

The GO bonds will be bid on the morning of October 24, 2023.  Sale Day Report is attached.

The City had a bond rating call with Standard & Poor's (S&P) rating service on October 11, 2023.  S& P assigned an AA+ rating to this issue and affirmed the City's rating of AA+ on prior issues.  The ratings report is attached.

The City's preliminary levy that was adopted September 26, 2023, included an estimated annual debt levy of $188,736 that was applicable to this bond being sold to fund approximately $1.453M of  2024 Capital Equipment included in the 2024 budget - 2 plow trucks, front-end loader, 4X4 dump, Bobcat loader, etc.   When sold, if the annual debt levy is determined to be higher than the $188,736 the levy amount for 2024 cannot be increased, but the remaining 9 years of annual levies would offset the difference.  If there are any debt savings after the final sale has occurred on October 24, 2023, this reduction will be reflected in the final debt levy adopted in December. 

The remainder of the debt, $7M will be funded from the annual  tax increment generated in the City's Tax Increment District #14 known as The COR. 

Alternatives:

1.  Motion to Adopt Resolution #23-268 Providing the Issuance and Sale of $8,315,000 General Obligation Bonds, Series 2023A.

2.  Motion to not Adopt Resolution #23-268 Providing the Issuance and Sale of $8,315,000 General Obligation Bonds, Series 2023A, which would be to reject the bids of the bond sale.

 

The issuance of the GO bonds will be to fund the TIF 14 area improvements as outlined above and some of the Capital Equipment that was included in the 2024 Preliminary Adopted General Fund Budget.

Staff recommends Alternative #1.

Motion to Adopt Resolution #23-268 Providing for the Issuance and Sale of $8,315,000 General Obligation (GO) Bonds, Series 2023A and Levying a Tax for the Payment Thereof.