Adopt Resolution #18-100 Providing for the Sale of $1,210,000 General Obligation Road Reconstruction Bonds, Series 2018A

Purpose:  To provide funding for road reconstruction projects via the issuance of Street Reconstruction Bonds. Background:  Over the past several years, much discussion has taken place over the financing of road improvements.  These needed improvements:  Sealcoats, 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).  Based on the Long-Term Street Maintenance Program, it was estimated that the cost to address the highest priority projects averaged $2.2M over the first five years and increased after that.  Of the estimated $2.2M, $500,000 would be funded from the General Fund and the remainder from the issuance of debt.  The payment of said debt would be paid from an annual tax levy and assessment to benefiting parties.     The year 2015 was the first year that the City issued road reconstruction debt to fund the first road reconstruction project (Garnet and 168th Avenue) as outlined in the Long-Term Street Maintenance Program. and the 2015-2019 Capital Improvement Plan (5-Year Road Plan that was adopted in 2015 and that outlined the respective projects and costs for years 2015-2019).  The City issued a total of $1,205,000 GO Street Reconstruction bonds in 2015 for Garnet/168th Avenue reconstruction and overlay projects. The second road reconstruction project to be undertaken per the Street Maintenance Program and the 2015-2019 Capital Improvement Plan was Andrie Street and 164th Lane.  The City issued a total of $1,650,000 GO Street Reconstruction bonds in 2016 to fund these improvements. The third year of road reconstruction projects to be undertaken per the Street Maintenance Program and the 2015-2019 Capital Improvement Plan was the reconstruction of Alpine Drive and Sunwood Drive.  The City Issued a total of $895,000 GO Street Reconstruction bonds in 2017 to  fund these reconstructions. The City is now in its fourth year of funding road projects via the issuance of Street Reconstruction bonds.  For year 2018, $1,210,000 (hard and soft costs) is proposed to be issued to fund the reconstructions of Stanhope Terrace and River's Bend, along with several overlay projects in the areas known as  North Forty, Northfork Itasca and Northfork Oaks. The issuance of General Obligation Street Reconstruction Bonds will be used to fund the street reconstruction portion only of the project.  Storm water utility costs related to any of the projects will be funded from the storm water utility fund. If authorized, The GO Street Reconstruction Bonds are scheduled to be sold the morning of June 26, 2018, with approval of the sale and terms brought forward to the City Council for their approval that same evening (June 26, 2018).

Ehlers and Associates, the City's financial consultant, has prepared a Presale Report of the Bond issue which is attached.  The Presale Report reflects the bond issuance in the amount of $1,210,000 with an all inclusive interest rate of approximately 3.57%.  The term of the bond is for 10 years with the annual debt service averaging $141,425.  The payment of this debt will be funded via the annual property tax levy and a 25% assessment on benefitting properties.  The first year of this levy will be for 2018 payable.

1.  Motion to Adopt Resolution #18-100 Approving the Issuance of General Obligation Street Reconstruction Bonds.

#2.  Motion to not Adopt Resolution #18-100 at this time.

The issuance of Street Reconstruction Bonds (and a percentage from special assessments) will fund the reconstructions of Stanhope Terrace and River's Bend the the overlays of North Forty 2 &3, Northfork Itasca, Northfork 2 &3 and Northfork Oaks as outlined in the Long-Term Street Maintenance Program and the 2015-2019 CIP.

Staff recommends Alternative #1 as this is the authorization to issue debt with final approval of the acceptance of the bond sale terms at the City Council's regular June 26, 2018 meeting.  The issuance of debt follows the direction that City Council authorized as the funding mechanism of how road reconstruction projects were to be funded (with a portion funded via special assessments).

Motion to Adopt Resolution #18-100 Providing for the Sale of $1,210,000 General Obligation Street Reconstruction Bonds.