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12 Sale of 2001 BondsCITYOF 590 City Center D~qve, PO Box 147 Chanhassen, Minnesota 55317 Phone 612.937.1900 General ?ax 612.937.5739 Engineering Fax 612.937.9152 Public Safety Fax 612.934.2524 Web wzw. ci. chanhassen, mn. m MEMORANDUM TO: FROM: Mayor City Council Bruce M. De$ong, Finance Director DATE: May 7, 2001 SUBJECT: Call for Sale of 2001 Bonds Several city projects are now reaching the point where we need to address their funding so that we can plan our bonding for 2001. The library design is proceeding and we need council direction regarding the timing of the bonding. We need to consider financing for the BC-7 and BC-8 water and sewer line extension. We should also make some decisions f'malizing the 2001 budget and whether we will bond for our seal-coating projects and our equipment purchases. Finally, we have the option to refinance some Tax Increment Financing (TIF) debt that will save the city over $30,000 in interest costs. The purpose of this memo is to request City Council guidance regarding debt ' financing for various projects during 2001. These decisions need to be made on a timely basis in order to take advantage of a refinancing opporttmity and to take advantage of currently low interest rates. The attached memo from Mark Ruff of Ehlers outlines his recommended timeline for financing these items as a package. This process is designed to minimize issuance costs. The rapid time frame is necessary in order to provide the holders of the refinanced bonds a 30-day notice as required by the bond indenture. There are several issues that need to be resolVed prior to deciding the bonding arrangements. We must decide whether to refmance the TIF debt, which should be a given. Another decision is to determine what items from the General Fund and Capital Improvement Program (CIP) to fmance with debt. A time frame must be established for accomplishing these financings in light of federal government regulations regarding arbitrage and bank qualification. The last decision is how much principal to issue in library bonds. ~e City of Chanhassen. A ~rowing community with clean lakes, tluality schools, a charmin~ downtown, thrivin~ businesses, and beautiful parks. A ~reat ~)lace to live, work, and pla~. Call for Sale of 2001 Bonds May 7, 2001 Page 2 It is clearly in the city's best interest to refinance the TIF debt. It reduces the projected deficit in the downtown district and saves taxes, but the issuance costs of refinancing would be a huge percentage of the savings if this is the only debt issued. It makes sense to combine this into a larger package with the BC-7 & 8 utility project and the Century Boulevard street reconstruction project. I recommend including the seal-coating expenditures currently shown in the general fund budget. Teresa Burgess received authority from the council to modify the assessment process for Century Boulevard to accommodate the inclusion with Century Boulevard. For cash flow reasons, I think it would also be prudent for the council to include issuing equipment certificates for the other capital items anticipated in the 2001 CIP Major Equipment category. These projects will be paid using a variety of resources. The BC-7 & 8 project will be partially city-funded, but the majority of the project will be assessed to the benefiting property owners. The remaining city portion will probably be collected as connection charges as other property develops in the future. Century Boulevard will be totally assessed against the property owners. The seal-coating will be repaid through the debt service levy. The equipment debt would also be repaid through the debt service levy. Using the debt service levy is advantageous in that it isn't subject to levy limits which we discussed as a possibility last December that has been included in the Minnesota House omnibus tax bill. Arbitrage is the amount of interest earned on bond proceeds at a rate higher than the bond interest rate. Arbitrage rebate regulations require that we monitor the investment earnings during the life of the bonds and return any arbitrage earnings to the IRS. The calculation depends on several factors that we can't control including the interest rate received on investments and the amount of prepayments received from special assessments. Given those factors, it is something that we can't determine in advance of issuing debt. There is a "safe harbor" rule that exempts the city from calculating and rebating arbitrage. That option is based on meeting spending targets during the construction phase. Spending 10% of the proceeds during the first six months, 45% in the first year, 75% within eighteen months, and 95% within two years allows us to avoid the arbitrage calculations and keep any arbitrage earnings. Bank qualification is a tax regulation that makes our bonds more attractive to potential purchasers by exempting the interest from federal tax calculations for banks that hold municipal debt. The only requirement is that we issue less than $10,000,000 in a given year in order to be bank qualified. Call for Sale of 2001 Bonds May 7, 2001 Page 2 Scott Botcher and I have had some conversations regarding the timing of the library bonds issue in order to eliminate the arbitrage calculations. In order to meet those time frames, we believe it is in the city's best interest to postpone issuance of the library debt until later this year. That timing allows the plans and specifications to be prepared and signing a construction contract within the first six months. It also allows a full season of construction to meet the spending requirements. Lastly, we need to decide how much to issue in library debt. We have the ability under state law to add an amount equal to the underwriters discount. If we set the discount at $100,000, then we are able to issue bonds in the amount of $6,100,000. This gives us maximum flexibility in designing and constructing the library. The approximate amount of new bonding for 2001 is as follows: BC-7 & 8 $1,500,000 Equipment _480,000 Century Blvd 440,000 Seal-coating 160,000 $2,580,000 Library 6,100,000 Grand Total $8,680,000 Recommendation City staff recommends that we bond for all the above projects. The first four should be grouped for sale prior to July 1, 2001 and the library debt should be issued by December 1,2001. CHANHASSEN, MINNESOTA CITY MANAGER Mayor and 4 Member City Council. Incumbent's salary $88,000 plus bonus. $7 M General Fund. Growing suburban community 25 miles west of Minneapolis. Requires bachelor's degree with MPA, or closely related degree, strongly preferred. Minimum of 10 years experience in city or county government. Strong background in municipal operations with experience in land use, economic development initiatives and redevelopment, strong oral and written skills, capital programming skills, enthusiastic leadership. Manage day-to-day activities of city providing direction to five department heads and their functioning departments. Resume and references to: City of Chanhassen, 690 City Center Drive, Chanhassen, MN 55317. Applications due: 6/22/01. POSITION PROFILE CITY OF CHANHASSEN CITY MANAGER DRAFT CITY OVERVIEW The City of Chanhassen, located in the southwestern portion of the Twin Cities metropolitan area, is situated primarily in Carver County and a small portion within Hennepin County. The city encompasses an area of 15,117 acres or 23.6 square miles. The City's 1980 federal census was 6,351; the 1990 census count of 11,732 represents an 85% increase over the 1980 census figure. In 2000 the City estimated the population to be 20,321, a 58% increase over the 1990 census. The City of Chanhassen was organized as a municipality in 1967 and became a statutory City in 1974. The City's governing body is the City Council, comprised of the Mayor and four Council members. The Mayor serves a two-year term. Until June 2001, the daily management and administration of the City xvas under the direction of the City Manager, Mr. Scott Botcher; he served in this capacity since 1999. Mr. Botcher left his employment with the City of Chanhassen due to a career opportunity for his wife requiring relocation to Milwaukee and to pursue other personal opportunities. The City has 67 full-time employees and 56 part-time and seasonal employees. The City contracts with Carver County for Law Enforcement services. The Chanhassen Fire Department is a 45-member volunteer force with a fully equipped fire station and a smaller satellite facility. Two independent school districts serve the City: · Independent School District 112 (Chaska) has an enrollment of approximately 6,250. · Independent School District 276 (Minnetonka) has an enrollment of approximately 7,700. Chanhassen's largest four employers are companies in aerospace, computer software, printing, and baked goods. As a group, they employ approximately 2,400 personnel. Chanhassen continues to experience strong residential and commercial/industrial growth. Major projects are currently underway in the Chanhassen Lakes Business Park and in downtown Chanhassen, as well as continued building activity in a number of large residential developments. For example, Chanhassen currently has 6,500 single-family housing units and approximately 300 new housing units are built each year. The community has capacity for another 2,500 homes. About one-third of potential commercial development remains. The City of Chanhassen has undergone a financial streamlining in the last two years. The City, under the direction of Mr. Botcher and Finance Director Bruce DeJong, has taken steps to accurately report it financial positions and to reduce the number of separate funds. The City believes strongly in communicating financial information in a fashion that accurately imparts to its citizens the municipal financial condition. The City has been awarded the Certificate 0fAchievement for Excellence in Financial Reporting from the GFOA since 1992. Additionally, the City achieved a bond rating upgrade in 1999 (to Al) and had its long term outlook upgraded by both Moody's and Standards and Poors' from Neutral to Positive in 1999 and 2000. The City has also been active in Tax Increment Financing Issues. City staff has testified multiple times before the Legislature on this topic. Some of the City's TIF Districts have been impacted greatly by the rate compression actions of the State. In response to this problem, the City has been an active participant in the TIF grant pool program, utilizing a staff TIF task force comprised of the City Manager, Assistant City Manager, Finance Director, Independent Financial Advisor, Auditor, and TIF Legal Counsel. The actions of this team have made Chanhassen the most successful Minnesota City in accessing these funds. Chanhassel~'S 2001 Adopted General Fund Budget has total expenditures of $7,637,143. For detailed information about the City's finances, applicants are encouraged to review the most recent audit and/or CAFR. OBJECTIVE AND SCOPE OF THE CHANHASSEN CITY MANAGER POSITION Plans and directs all City operations to ensure delivery of efficient municipal services and that new deveiop~nent is in accordance with the objectives and guidelines established by the City Council in parallel with the Metropolitan Council's Comprehensive Plan. Advises the Council regarding impact of policy decisions and represents the interests of the City of Chanhassen in metropolitan and state activities as delegated by the City Council. RELATIONSHIPS Reports to: City Council Supervises: Department Heads and Support Staff Indirect supervision over all employees of the organization through the supervisory of department heads. RESPONSIBILITIES · Plans and directs general administration of city services. Provides advice and/or recommendations, with supportive data, to the City Council as a guide to policy-making. · Relieves the Council ~nembers of as much administrative detail, inquiry, etc. as possible so they may devote most of their time to their policy-making responsibilities. · Prepares agendas for Council meetings and provides supporting data. · Keeps the City Council informed on important developments that may affect the administration of the City government and what they will need to know to perform effectively as Council members. · Coordinates administration and services being rendered by the various departments of City govermnent to ensure the best service level is being achieved including: - Recommending staffing levels as well as other changes in administration as may be justified to assure a high standard of performance is maintained. - Appoints, dismisses or otherwise disciplines city employees. Involves department heads in the identification of achievement goals that provide standards to measure performance. - Reviews periodically and confers with department managers to assure that progress in each area is being achieved. - Oversees implementation of financial and fiscal planning in the City. · Follows through to assure that all City Council ordinances and directives are correctly interpreted and implemented. · Keeps informed on all aspects of municipal government and researches improved methods of administration. REQUIREMENTS · Bachelor's Degree in Public Administration, Urban Studies, or related field -Master's Degree in Public Administration preferred · Minimum 10 years experience in city or county government. Minimum of five years experience managing a similar size city or county or five years as assistant manager in a larger city or county · Private sector management experience helpful, not required KEY MANAGEMENT SKILLS AND ATTRIBUTES DESIRED · Lead by example · Empower staff--encourage positive risk taking · Demonstrated competence to define, communicate and ilnplement a vision and achieve stakeholder acceptance. · Demonstrated competence to facilitate partnerships with other public, private and non-profit entities to achieve community goals and objectives. · Ability to proactively facilitate open communication with council, staff and the community. · Ability to manage and provide stability to city hall and the community in a politically charged enviFoIllnent. · Continue to develop a city staff that values and "lives" the culture of continuous improvement and best practices to fulfill community needs. · Capability to envision and prioritize, the issues that face a growing city. · Ability to implement action plans with customer service as a number one ongoing priority · Make tough decisions and stay the course despite criticism · Balance long-term strategy with short term needs · Financial expertise - Cost/benefit analysis - Creative financing to affect economic development - Forecast budget variances - Project revenues · Demonstrated competence and desire to communicate and participate with community groups · Implement human resource policies - Career path planning with regularly structured performance reviews - Compensation administration - Hiring expertise relative to community culture and anticipated needs ISSUES THAT FACE THE CITY OF CHANHASSEN Short Term · hnplement team strategies with employees and the City Council_ · Property tax - Citizens identify high property tax rates as a major concern. Expansion of quality amenities - Institute a process for determining the need for future public facilities. - Begin assessment for a public works facility expansion Future tax increment financing district shortfalls - The City's Debt Service Funds will experience Tax Increment Financing District generated balloon payments due in 2002 and 2004. Expansion of Hwy. 5 - Continue working with MnDOT to expand Highway 5 from Powers Boulevard (under construction) · Community Survey -Work to complete and assimilate recently completed community survey data into decision- making process. Long Term · Carry out Chanhassen's strategic plan - The strategic plan will require coordination and execution by City Staff and the Council. · Reconstruction of the north leg of State Highway 101 - MnDOT wishes to return State Highway 101 back to Carver and Hennepin Counties. The road borders both counties and serves as a major collector roadway for Chanhassen · residents. The reconstruction is anticipated to be controversial because of the number of ho~nes located near the highway. Construction of Highway 212 through Chanhassen is scheduled during the next 5 to 10 years - Participate in Hwy.212 planning to ensure that it meets the transportation needs and to minimize its negative impact to community. Housing Diversity - Promote a balanced housing supply to ensure housing availability for people with a wide variety of incomes. · Community Facilities - A needs assessment should be completed for cultural/recreational facilities such as an arts center, community center, hockey arena, and amphitheater. Applications will be accepted until June 22, 2001. Candidates may apply by forwarding their credentials to City of Chanhassen, 690 City Center Drive, Chanhassen, MN 55317.