Loading...
5 Call for Sale of BondsCITYOF '90 CiO, Center Ddve, PO Box 147 Chanhassen, Minnesota 55317 ?hone 612. 937. I900 General Fax 612. 937. 5739 Engineering Fax 612.937.9152 Public SafeO, Fax 612.934.2524 Web www. ci. chanhassen, mn. us MEMORANDUM TO: Mayor City Council FROM: Bruce M. DeJong, 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 finalizing 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. 5' 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 opportunity 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 finance 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 growing community with clean lakes, quality schools, a charmine downtown, thriving, businesses, and beautiful parks. A ~reat dace to live, work, and olay. 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 Minnes~)ta 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. ._ S the Ass° ci tes,. Inc. Executive Se~rch St2e~i~lists ._ 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 1998 the City estimated the population to be 18,331, a 56% 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 December 1998, the daily management and administration of the City was under the direction of the City. Manager, Mr. Don Ashworth; he served in this capacity since 1976. Mr. Ashworth currently serves as Economic Development Director and will report to the new City Manager. The City has 57 full-time employees and 34 parMime employees. The City contracts with Carver County for Sheriff and police services. The Chanhassen Fire Department is a 40-member volunteer force ~ith a neff.fully equipped fire station. Two independent school, districts serve the City: · Independent School District 112 (Chaska) has an enrolhnent 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 ho~nes are built each year. The community has capacity for another 2,500 homes. About one third of potential commercial development remains. k . _ J'age-2-of5- City of Chanhassen i~osition Profile/City A lauager Chanhassen's 1998 Adopted General Fund Budget has total revenue of $5,483,886. Rev en u e Taxes - $ 4,120~'386 Permits 637,800 Charges for Current Services 480,300 Interest/Other Revenue _ 117,000 Licenses 54,300 Intergovernmental 41,800 Fines and Penalties 31,500 Total Revenue $ 5,483,086 Expenditures Personnel Services $ Contractual Services Materials and Supplies Miscellaneous Expense Capital Outlay Total Expenditures $ Revenues over (under) Expenditures $ 3,199,633 2,043,798 504,567 (405,911) 19,000 5,361,087 121,999 OBJECTIVE AND SCOPE OF THE CIIANHASSEN CITY MANAGER POSITION Plans and directs all City operations to ensure eftScient municipal services and that new development is in accordance with the objectives and guidelines established by the City Council in parallel with the Metropolitan Council's COml)rehensive 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. RELATIONSItIPS Reports to: City Council Supervises: Department tteads and Support Staff Indirect supervision over all employees of City government through the supervisdry of department heads. RESPONSIB1LITI ES Plans and directs general adminlstration of city services. Provides advice and/or recommendations, with supportive data, to the City Council as a guide to policy-making. Relieves the Council members 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 infbrmed on all important developments that may affect the administration of' the City government and what they will need to know to perform effectively as Council persons. Coordinates administration and services being rendered by the various departments of City government 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. .Page-3 of S- City of Chauhassen Position Projql 'e/Cit. v l~,{anager RESPONSIBILITIES continued .... -- _ ._ __ Appoints, dismisses or OtherWise disciplines city emEloyees. .._ Involves department heads in the identification of achievement goals ~hat provide si-andards tO measure performance. Reviews periodically and con£ers with department managers to assure that progress in each area is being achieved. Oversees in~plementation of financial and fiscal pl~.-nn!ng in the CitY. Follows through to assure that all City Council ordinances and directives are correctly interpreted and implemented. Keeps informed on ali 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 ' -IrdgY MANAGEMENT SKILLS AND ATTRIBUTES DESIRED Lead by example Empower staff- encour, age positiv.e risk taking Define and co~nmunicate a vision and know how to get others to follow Continue to develop a city staffthat values and'"lives" the culture of continuous improvement and best practices to fi~lfill cominunity needs. Capability to envision and prioritize, the issues tlmt 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 criticis~n Balance long-teton strategy with short term needs Proactive communication with council and the sharing of information openly Financial expertise Cost/benefit analYsis Activity based budgeting Creative financing to affect economic development Forecast budget variances Project revenues City of Chauhassen Position JOrofile/Cio, ^ fanager lrdgY MANAGEMENT SKILLS AND A'I'TRIBUTES DESIRED continued... Demonstrated Competence and desire to communicate'with community gr6t~s hnplement human resource policies Career path planning with regularly structured performance reviews Compensation administration I4Mng expertise relative to community culture and anticipated n4eds ISSUES THAT FACE THE CITY OF CHANHASSEN Short Term Carry out Chanhassen's strategic plan The Council recently drafted the City's strategic plan and will require coordination and execution by City Staff and the Council. Implement team strategies with employees and tile City Council Property tax Citizens identify high properly tax rates as a major concern. Expansion of quality amenities Institute a process tbr determining the need for future public faqilities. Begin assessment for a public works facility expansion and a community/regional library. Information systems - - - Champion tile completion of tile information system upgrade to fiber optic cable and Y2K project. Continue activity based' budget pr6cess for 1999 In 1999, all employees ,,',,ill attempt to allocate their time to activities approved in the 1999 budget. The Final)ce Departmenl/will need to ensure that the new payroll system will accommodate activity based budgeting Future tax increment financing district shortfalls - - The city's downtown Tax Increment Financing District projects ,rill experience a revenue shortfall in the year 2003. Expansion of Hwy. 5 Continue to work with MnDot to expand the highway fi-om Powers Boulevard to Hwy.41 in the years 2000 and 2001. Long Term Reconstruction of the north leg of State Highway 101 MnDOT has returned 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 homes located near the highway. Thc proposed funding years for this project are 2004 - 2005. Page~5 of S- Ci~, of Chanhassen Position Profile/CiD' ,~Ianager ISSUES THAT FACE THE CITY OF CHANHASSEN continued.. - .... _ --2 Constmcti°n of Highway 212 through Chanhassen is -scheduled dUring' the next._ 5 .t° 10 .yearS _]¢ i~--~icipate 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 wi_de 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 January 31, 1999. Candidates may apply by contacting Bob Benson or Mark Sathe at 612-546-2100 or 800-848~4912 extension 3837.