4a. Public Works Facility CIP/Bonds
CITY OF
CHANHASSEN
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone: 952.227.1100
Fax: 952.227.1110
Building Inspections
Phone: 952.227.1180
Fax: 952.227.1190
Engineering
Phone: 952.227.1160
Fax: 952.227.1170
Finance
Phone: 952.227.1140
Fax: 952.227.1110
Park & Recreation
Phone: 952.227.1120
Fax: 952.227.1110
Recreation Center
2310 Coulter Boulevard
Phone: 952.227.1400
Fax: 952.227.1404
Planning &
Natural Resources
Phone: 952.227.1130
Fax: 952.227.1110
Public Works
1591 Park Road
Phone: 952.227.1300
Fax: 952.227.1310
Senior Center
Phone: 952.227.1125
Fax: 952.227.1110
Web Site
www.ci.chanhassen.mn.us
4-0.-,
MEMORANDUM
TO:
Mayor
City Council Members
FROM:
~.
Greg Sticha, Finance Director
DA TE:
September 8,2008
SUBJ:
Public Hearing to Consider Approval of a Proposed Capital
Improvement Program for Public Facilities and Preliminary
Approval for Issuance of Capital Improvement Program
General Obligation
PROPOSED MOTION
Staff recommends the Council adopt the following motion:
"The City Council adopts a resolution approving the creation of a CIP plan
and adoption of a resolution giving preliminary approval of issuance of
General Obligation Capital Improvement Plan Bonds not to exceed $8.5
million from 2008 to 2012."
Approval of this item requires a simple majority vote of those City Council
members present.
BACKGROUND
The City Council has decided to proceed with the construction and financing of
a new Public Works Facility. A public hearing is being held tonight to allow for
input on adoption of a specialized G.O. CIP document and authorization of
issuance of debt related to those facilities listed in that document. This
document lists all current public facilities the city plans on issuing levy
supported G.O. debt for years 2008-2012.
After the public hearing is finalized, the City Council will adopt a resolution
authorizing adoption of the CIP plan and authorizing issuance of the GO CIP
Bonds. There will then be a thirty day window for the public to generate a
petition requesting a reverse referendum on the public works facility. If such a
petition signed by voters equal to at least 5 percent of the votes cast in the last
general city election (522 signatures), is received by the municipal clerk within
30 days after the public hearing, then the bonds may not be issued unless
approved by the voters at an election.
Chanhassen is a Community for Life. Providing for Today and Planning for Tomorrow
Mayor & City Council
September 8, 2008
Page 2
RECOMMENDA TION
Staff recommends that the City Council hold the public hearing on the CIP
document, and adopt the resolution approving the CIP document and authorizing
preliminary approval of the issuance of GO CIP Bonds for facilities listed in that
document.
ATTACHMENTS
1. Resolution
2. CIP Document
i1
CITY OF CHANHASSEN, MINNESOTA
CITY COUNTY RESOLUTION #
A RESOLUTION BY THE MAYOR AND CITY COUNCIL GIVING PRELIMINARY
APPROVAL FOR THE ISSUANCE OF THE CITY'S GENERAL OBLIGATION
CAPITAL IMPROVEMENT PLAN BONDS IN AN AGGREGATE AMOUNT NOT
TO EXCEED $8,500,000 AND ADOPTING THE CITY OF CHANHASSEN,
MINNESOTA CAPITAL IMPROVEMENT PLAN OF 2008 THROUGH 2012
THEREFOR
WHEREAS, the City Council of the City ofChanhassen (the "City") proposes to issue its
General Obligation Capital Improvement Plan Bonds, (the "Bonds") and
adopt the City of Chanhassen Capital Improvement Plan of 2008 through
2012 therefor (the "Plan"); and
WHEREAS, the City has caused notice of the public hearing on the intention to issue the
Bonds and on the proposed adoption of the Plan to be published pursuant to
and in accordance with Minnesota Statutes, Section 475.58, Subdivision 3b;
and
WHEREAS, a public hearing on the intention to issue the Bonds and on the proposed
Plan has been held on this date, following published notice of the hearing as
required by law; and
WHEREAS, in approving the Plan, the City Council considered for each project and for
the overall Plan:
1. The condition of the City's existing infrastructure, including the
projected need for repair and replacement;
2. The likely demand for the improvement;
3. The estimated cost ofthe improvement;
4. The available public resources;
5. The level of overlapping debt in the City;
6. The relative benefits and costs of alternative uses of funds;
7. Operating costs of the proposed improvements; and
8. Alternatives for providing services more efficiently through shared
facilities with other local government units.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COUNCIL
hereby gives preliminary approval for the issuance of up to $8,500,000 aggregate
principal amount ofthe Bonds. The Plan is hereby adopted, the same being before the
City Council and made a part of these proceedings by reference. The City declares its
official intent to reimburse itself for the costs of the Plan from the proceeds ofthe Bonds.
PASSED by the City Council of Chanhassen on this 8th day of September 2008.
. ..
EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY OF , MINNESOTA
HELD:
,20_
Pursuant to due call and notice thereof, a regular or special meeting of the City
Council of the City of , Minnesota, was duly called and held at the
City Hall in , Minnesota on the day of
20 at . for the purpose, in part, of giving preliminary approval for the
issuance of the City's general obligation street reconstruction plan bonds and adopting
the City's street reconstruction plan.
The following members were present:
and the following were absent:
Member
its adoption:
introduced the following resolution and moved
Five-Year Capital Improvement Plan for the
City of Chanhassen, Minnesota
2008 - 2012
September 8, 2008
Prepared by:
City of Chanhassen
7700 Market Boulevard
Chanhassen, MN 55317
Ehlers & Associates, Inc.
3060 Centre Pointe Drive
Roseville, MN 55113
EHLERS
& ASSOCIATES INC
Capital Improvement Plan for the City of Chanhassen, Minnesota
2008 through 2012
I. INTRODUCTION
In 2003, the Minnesota State Legislature adopted a statute that generally
exempts municipal bonds issued under a capital improvement program from
the referendum requirements for general obligation bonds usually required
for city halls, public works, and public safety facilities. The 2005
Legislature added towns to the meaning of a municipality and town halls and
libraries to the meaning of a capital improvement.
PURPOSE
A capital improvement is a major expenditure of municipal funds for the
acquisition or betterment to public lands, buildings, or other improvements
used as a city hall, town hall, library, public safety, or public works facility,
which has a useful life of 5 years or more. For the purposes of Minnesota
Statutes, Section 475.521, capital improvements do not include light rail
transit or related activities, parks, road/bridges, administrative buildings
other than city or town hall, or land for those facilities.
For a municipality to use its authority to finance expenditures under Section
475.521, it must meet the requirements provided therein. Specifically, the
city council must adopt a 5-year capital improvement plan that meets certain
statutory requirements, after holding a hearing on the plan. The council
must also approve the sale of capital improvement bonds by a 3/5ths
majority of its membership. In addition, it must hold a public hearing for
public input regarding sale of the bonds. Notice of such hearing must be
published in the official newspaper of the municipality at least 14, but not
more than 28 days prior to the date of the public hearing. In addition, the
notice must be posted on the City's official web site.
The City of Chanhassen ("City") is holding a hearing on September 8, 2008
to consider this Capital Improvement Plan ("Plan") and the aggregate
City of Chanhassen CIP
Page 2
issuance of up to $8,500,000 of general obligations bonds for the
construction of (i) a new Public Works facility to replace the existing
building, and (ii) Fire Station #3 in southern Chanhassen ("Projects").
The bonds must be approved by the voters only if the conditions for a
"reverse referendum" are met. If a petition signed by voters equal to at least
5 percent of the votes cast in the last general city election requesting a vote
on the issuance of bonds is received by the municipal clerk within 30 days
after the public hearing (by October 8, 2008), then the bonds may not be
issued unless approved by the voters at an election.
The statute has established certain criteria that must be met. Under these
criteria, the City has considered the following eight points:
1. Condition of the City's infrastructure and need for the project
2. Demand for the improvement
3. Cost of the improvement
4. Availability of public resources
5. Level of overlapping debt
6. Cost/benefits of alternative uses of funds
7. Operating costs of the proposed improvements
8. Options for shared facilities with other cities or local governments
The purpose of this Plan is to consider statutory criteria listed above as they
relate to the proposed construction of the Projects.
City of Chanhassen CIP
Page 3
II. PROJECTS SUMMARY
This Plan is intended to describe and analyze the need for the Projects in
accordance with Minnesota Statutes, Section 475.521.
Following is a summary of estimated Projects costs funded from debt:
2008 Public Works Expenditures
. Architectural and engineering work
. Site improvements
. Construction
. Furnishings and equipment
. Costs of issuance
. Capitalized interest
$7 ~550~000
[Note: The total estimated Public Works project cost is $8.8 million, $7
million of which the City intends to fund through debt issuance. The
remaining $550,000 of the estimated Bond amount consists of costs of
issuance and capitalized interest.]
2010 Fire Station #3 Expenditures
· Architectural and engineering work
. Site improvements
. Construction
. Furnishings and equipment
. Costs of issuance
. Capitalized interest
$950,000
[Note: The total estimated Public Works project cost is $3 million, $800,000
of which the City intends to fund through debt issuance. The remaining
$150,000 of the estimated Bond amount consists of costs of issuance and
capitalized interest.]
2011- 2012 Expenditures
· None contemplated at this time
$0
The City has analyzed the eight points required per statute for each project
on an individual basis and as a whole. Its findings are as follows:
City of Chanhassen CIP
Page 4
Conditions of City Infrastructure and Need for the Project
The existing public works facility is inadequate in size, is in need of
significant repair, lacks secure storage areas for vehicles, lacks adequate
storage space for gravel and other materials precluding the City from
purchasing material in bulk, has many other inadequacies, and is not
centrally located within the City for the most efficient operations. The
existing facility is 28 years old and in need of improvements, upgrading,
remodeling and expansion. The existing site is not big enough to
accommodate the necessary changes. A new facility located at 7901 Park
Place is a cost effective way to achieve the needs.
The City has grown and is expected to continue to grow in a manner
requiring enhanced fire response abilities in southern Chanhassen. Fire
Stations #1 and #2 are located in the North and West areas of the City and
are thereafter unable to provide the level of service that the southern portion
of the City will require. Fire Station #3 is anticipated to be located at 1000
Lyman Boulevard.
Demand for Projects
The demand for the improvements is driven by the current condition of the
existing public works facility, originally built in 1980, and the overall
growth of the City. The Council recognizes that the City's population (or
street miles or some measure) has grown 104% since 1987.
Estimated Cost of the Projects
See Project Summary for details of all project costs.
Availability of Public Resources
The City plans to utilize property taxes to pay 20 years of debt service on the
Public Works project, beginning in 2010 and ending 2029. The City plans
to utilize property taxes to payl7 years of debt service on the Fire Station
project, beginning in 2011 and ending in 2027.
Level of Overlapping Debt
The 2007 City's share of the Hennepin County debt, spread on the basis of
proportional tax capacity, is approximately $327,765. The City's share of
the Carver County debt, is approximately $4.5 million. The City's share of
the school districts' debt within City boundaries is $65 million. The
increased level of debt is not expected to cause the City any financial stress.
The City's bond rating from Standard and Poor's is AA-, a very strong
City of Chanhassen CIP
Page 5
rating for a growing community with the City's characteristics. A copy of
the most recent rating agency report (from 2006) is available upon request
from the City Clerk.
Relative Costs and Benefit.s of Alternative Uses of the Funds
The Public Works project will provide for a safer and more efficient work
environment for City employees. It will also serve to lower equipment
maintenance costs by allowing equipment to be maintained in a temperature
controlled environment. Alternate uses of the funds would to make
improvements to the existing facility to keep it weatherproof and
functioning. A facility study has determined that the cost of moving the
public works facility to a new and larger site is $400,000 more than
renovating the existing building. The City Council has determined that the
benefit of improved work environment and efficiency in delivering services
is worth the additional cost.
Given the nature of fire protection, there are no contemplated alternatives to
the construction of a Fire Station #3 to serve southern Chanhassen.
Operating Costs of the Proposed Improvements
The new Public Works facility will achieve savings through:
1. Better energy efficiencies
2. Its central location will save on fuel costs for public works
vehicles throughout the City.
3. Increased storage will allow the City to save by purchasing
materials in greater volumes.
Nonetheless, it will be a larger facility and offer more tempered storage and
work space. Overall operating expenses are expected to be higher than the
current public works facility.
The City intends to design Fire Station #3 with energy efficiencies, but as a
new City facility, it is expected to increase operating costs upon completion.
Options for Shared Facilities with Other Cities or Local Government
The options to share with other facilities or governments are not good due to
the requirement that the public works facility must meet the infrastructure
maintenance needs of the entire community. No excess capacity is available
in similar facilities located within or near the City limits. Serving other
communities from the planned new facility would necessitate a larger and
more expensive project. The same is true of the proposed Fire Station #3.
City ofChanhassen CIP
Page 6
FINANCING THE CAPITAL IMPROVEMENT PLAN
The total amount of requested general obligation debt to be financed under
this Plan is a maximum of $8.5 million. Repayment of the debt is
anticipated to be funded through the property tax levy.
Under state law, the maximum amount of principal and interest to become
due in any year on all outstanding bonds issued under this section, including
the bonds to be issued, shall not exceed 0.16 percent of the taxable market
value of property in City. For Pay 2008, the City's taxable market value
exceeds $3.3 billion and so the maximum annual CIP debt service is
approximately $5.3 million. The cumulative debt service of the proposed
2008 and 2010 bonds is not expected to exceed $750,000, leaving over $4.5
million of remaining capacity.
City of Chanhassen CIP
Page 7