Adopt Resolution #18-121 Providing for the Issuance and Sale of $1,210,000 GO Street Reconstruction Bonds, Series 2018A, Pledging Special Assessments and Levying a Tax for the Payment Thereof

Purpose:  To provide funding for road reconstructions via the issuance of Street Reconstruction Plan 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 highest priority projects averaged $2.2M over the first five years and increased thereafter.  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.

At its regular meeting of May 22, 2018 City Council passed Resolution #18-100 authorizing the issuance of GO Street Reconstruction Bonds.

Jason Aarsvold from Ehler's and Associates, the City's financial consultant, will present the bid results on the night of June 26, 2018 as the Go Street Reconstruction bonds will be bid on earlier that afternoon by prospective bond buyers.  The total bonded request, as noted above, is $1,210,000.

The City had a bond rating call with Standard & Poor's (S&P) rating service on June 15, 2018.  S&P assigned an AA+ rating to this issue and affirmed the City's rating of AA+ on prior issues.  The current S&P rating report is attached.

Ehlers and Associates, the City's financial consultant, has prepared a Presale Report of the Bond issue which is attached.  The Pre-sale Report reflects the bond issuance in the amount of $1,210,000 with an all inclusive interest rate of 3.57%  The term of the bond is for 10 years with the annual debt service of approximately $141,425.  The payment of this debt will be funded via the annual property tax levy and a 25% assessment on benefiting properties.  The first year of this levy will be for 2019 payable.

#1:  Motion to Adopt Resolution #18-121 authorizing approval of the sale of $1,210,000 GO Street Reconstruction Bonds, Series 2018A,

#2:  Motion to not Adopt Resolution #18-121 which would be rejecting the bonds of the bond sale

The issuance of the Street Reconstruction Bonds (and a percentage from special assessments) will fund the reconstructions of Stanhope Terrace and River's Bend and overlays in the Northfork area.  These street improvements were outlined in the Long-Term Street Maintenance Program and the 2015-2019 CIP.

Staff recommends alternative #1 as the issuance of debt follows the direction that City Council authorized as the funding mechanism of how road reconstruction projects would be funded (with up to 25% being funded via special assessments).

Motion to Adopt Resolution #18-121 providing for the Issuance and Sale of $1,210,000 GO Street Reconstruction Bonds, Series 2018A Pledging Special Assessments and Levying a Tax for the Payment Thereof