8. Update of 2004 Bond SaleCITYOF
C HASSEN
7700 Laa;ket Boulevard
PO Box 147
Chanhassen MN 55317
Administration
Pher/e 952 2271100
Fa~,: 952 22711 I0
Building Inspections
Phc, nc: 952 227 1180
Fax 952 2271190
Engineering
Pho!!e 952227 1160
Fax: 952 227 1170
Finance
P!one 9522271140
Fax: 952 2271110
Park & Recreation
P~lor e: 9522271120
Fax 95222711!0
Recreation O~,rxer
23!0 Coulter Boulevard
Phone: 9522271400
Fax: 9522271404
Planning J
Natural Resources
Phone 952 227 1130
Fax 952227 1110
Public Works
1591 Park Road
Phor/c 952 2271300
Fax 9522271310
Senior Center
Phone: 9522271125
Fa× 952227 1110
Web Site
'TO:
MEMORANDUM
Mayor
City Council
FROM: Bruce M. DeJong, Finance Dlrector~
DATE: May 19, 2004 ,'
SUBJECT: Update on 2004 Bond Sale
The 2004-2008 Capital Improvement Program (CIP) anticipates issuing debt to
finance various city construction projects and equipment purchases. The purpose
of this update is to determine how much debt to issue this year for each of these
purposes. The question before the City Council is whether to bond for these
projects, pay for some with cash, and advance some other projects. We wish to
move rapidly in bonding these items to take advantage of the currently low
interest rates for municipal debt issues before they rise much further.
Background
The budget total bonding in the CIP for 2004 is $6,971,400. The assessment
bonding amounts includes $805,000 for street projects. The projects are annual
street improvement for $760,000, Highway 212 for $35,000, and Highway 41
water improvements for $10,000. The Certificates of Indebtedness show
equipment purchases of $766,400 in various departments. The Utility funds show
projects totaling $5,400,000 which includes $4,500,000 for the water treatment
plant and $900,000 for Well 9.
The assessment bond issue should pay for the total costs that the city and assessed
properties will cover on both projects 04-01 Residential Streets and 04-02 MSA
Streets. Those costs are estimated at $220,000 in assessments and $265,000 in
city portion for project 04-01 and $328,000 in assessments for project 04-02. This
totals $813,000 which is modestly higher than projected. Bonding costs (for
attorney fees, financial consultant fees, underwriter discount, and paying agent
fees) add up to an additional 3% to the total bond issue amount, bringing the total
issued up to $840,000. Staff recommends this full amount be issued with a
duration of eight years as we have in the past.
The Equipment Certificate amount of $766,400 does not include the former
library space remodeling costs. However, we can include those in the issue as
long as we cite the appropriate statutory authority for these bonds. Those costs
Ia. k arid play
The City of Chanhassen · A growing community with clean lakes quality schools a (harrmn(: d:/¢,'ntov~'~ Iix ving i)ljSitig~}s( s ',',ir, alit g Ira}Is an(i lseautirul parks s ,, ,;~t pl~:e ',5 ,-
Update on 2004 Bond Sale
May 19, 2004
Page 2
CITYOF
CHANHASSEN
7700 Ba~<,et Boulevard
PO Box 147
C!~aqSassen MN 55317
Administration
Fax 952 227111(3
Building Inspections
Phone 952 2271180
Fax 952227 1190
Engineerino
Ph"ne 9522271160
Fax 952 2221170
Finance
Fax 9522271110
Park & Recreation
Pr',)rle 952227 1120
Fax 952 227 1110
Recreation/Center
2310 Oo~i~er Boulevard
Pkane 952227 1400
Fax 9522271404
Planning &
Natural Resources
Phoq~.': 952 227 1130
Fax 952 2271110
Public Works
1591 Park Road
Plane 952 2271300
Fax 9522271310
Senior Center
Phc'~e :q52 227 1~25
Fax 952 227 !110
Web Site
,,,',s'~, C J C la it assr-F/rT/r/us
will be approximately $230,000 which will then be paid along with the equipment
over the five year term of the bonds. Including this will mean that we have a total
cost of $996,400. The issue amount with costs will be about $1,030,000.
The utility system anticipated issuing $4,500,000 for the water treatment plant.
After further discussions with Steve Nelson of SEH, staff is recommending
scaling up the treatment to a gravity plant that can handle the ultimate buildout of
this section of the water system. Increasing the size to an 8.6 million gallon per
day plant will raise the project costs to an estimated $10,500,000. I have not
discussed this difference with Jessica Cook from Ehlers. This will have an impact
on the water treatment costs that may affect the rates we need to charge and may
require us to extend the debt further than the 15 years assumed in the rate study.
The utility system planned another $900,000 for Well 9. In reviewing the rate
study document, which was completed after the CIP, we anticipated paying for
Well 9 with $900,000 in cash from the water connection fees. I have discussed
this difference between the two documents with Jessica Cook. We have come to
the conclusion that issuing debt for this project doesn't really impact the fund
much one way or another, given our assumptions on interest rates and inflation, so
we recommend paying for it from cash as shown in the rate study.
The purchase of the SCADA system was anticipated to be paid for with a
combination of funds from the treatment plant for the water portion and cash over
five years for the sewer portion. Staff is now recommending that this entire
project be bonded this year at a total cost of $800,000. The only additional
amount that may be necessary this year is $150,000 for the water main to service
the John Klingelhutz property. Staff recommends that this be rolled into the
utility bonding for this year.
The only question remaining is whether to bond for and pursue purchase of
sufficient land for the second treatment plant. The CIP has this purchase
scheduled for 2007, but staff is thinking that it might be wiser to pursue this
project in 2004. With the rapid inflation of land prices and continued strong
development pressure, we may be better served by identifying and purchasing a
site as soon as possible. If that is the desire of the City Council, we can include
that in the bonding at whatever dollar amount seems appropriate. The amount
included in 2007 was for $680,000.
The total utility bonding recommended by staff is for $10,500,000 for the
treatment plant, $800,000 for the SCADA, $680,000 for land, and $150,000 for
the Klingelhutz trunk mains. This totals $12,130,000 for a total bond issue
including issuance costs of $12,375,000. This issue will be for a term of 15 - 25
The City of Chanhassen · A grow~r'~g community with clean lakes quality schools ~ ,:harn~i~ ql ,:',m¢,n',:~,,,,,,': ti'r~,,iig b,,is,',(sss( $ ,,',,irxllm, i !ials a::,c] ',:,(~,]t:!LJ B, srk', A (?;<! i:I¢~,::' to live ',,,,hr,< arx~ [siay
Update on 2004 Bond Sale
May 19, 2004
Page 2
CITYOF
CHANHASSEN
7700 Market Boulevard
PO Box 147
Ohanhassen MN 553~7
Administration
Phone 952 227 1100
Fax: 952227 1110
Building Inspections
Engineering
Ph~nr~ 9522271160
Fax~ 952 227 1170
Finance
Pf cr'e 952 227 i140
Fax 9522271110
Park & Recreation
Phone: 952227 1120
Fax 952 227 ~110
Recreation Oeoter
2310 Coulter Boulevard
Phone: 9522271400
Fax 9522271404
Planning &
Natural Resources
Phor~e: 9,52 227 113(}
Fax 952 227 1110
Public Works
1591 Park Road
Pnore 952 22;;.1300
Fax: 9522271310
Senior Center
Fa, 952 22~' 1110
Web Site
years to be determined in consultation with Ehlers as we adjust the rate study to
cover these newly projected costs.
Paul Oehme has identified most of the roadway and utility infrastructure projects
that will be required as a part of completing both Highway 212 and opening up the
2005 MUSA area. Those costs could involve bonding of up to $9,365,000. A
separate listing is attached for this portion of potential bonding.
Recommendation
Staff requests that the City Council provide direction regarding the bonding for
each of these debt issues in order for us to issue debt in June. These amounts may
be adjusted at the first City Council meeting in June when the bond sale is
authorized.
Attachments:
Bonding Summary
Hwy 212 & MUSA Potential Bonding
City of Chanbassen · A ~rocang cor,nmtani~y with clean lakes qLJality schools a char'".ing do,;~r'.tc,.',n !i'irp, :I' t'~[:Sl[:( ss; 5 ,.*.,::xhr!q tkiis [;,c*, be~[~titul [)ark.* /x ,.ir~ ;, 'place la ~,e ~c: ~ and p!a¥
Capital Improvement Program
City of Chanhassen, MN
PROJECTS BY FUNDING SOURCE
2004
Source Project#
Assessment Bonds
Annual Street Improvement Program 8T-012
TH 212 Construction ST-014
Water Improvements: TH 41 W-006
Assessment Bonds Total
Capital Replacement Fund
Former Library Space Remodeling
Capital Replacement Fund Total
MB-O01
Certificates of Indebtedness
Fire Dept.: SCBA Upgrades EQ-004
Fire Dept.: PPE (Turnout/Helmets) EQ-010
Computer Purchases/Upgrades EQ-013
Telecommunication Purchases/Upgrades EQ-014
Community Dev.: Light Duty Trucks EQ-015
Groundsmaster 580 Mower Replacement EQ-028
Public Works: Light Duty Trucks EQ-029
Tractor & Broom EQ-035
Web Enabled Software EQ-048
Computerized Records Retention System EQ-049
Light Duty Trucks: Parks EQ-052
Fire Vehicles EQ-054
Fire Department Equipment EQ-066
File Storage System EQ-069
City Council Data Tablets EQ-070
Former Library Space Furniture MB-001
Fire Station Capital Improvements MB-008
Playground Replacement Meadow Green Park PK&T-006
Playground Replacement Lake Ann Park PK&T-032
Certificates of Indebtedness Total
Revenue Bonds
Well #9
Water Treatment Plant
Treatment Plant Land Acquisition
Klingelhutz Trunk Mains
Revenue Bonds Total
W-001
W-019
W-031
Priority 2004
0 760,000
0 35,000
0 10,000
805,000
230,000
230,000
0 5,000
0 15,000
0 73,300
0 7,600
0 24,000
0 78,000
0 28,000
0 51,000
0 65,000
0 22,500
2 62,000
80,000
0 10,000
2 30,000
4 21,500
0 50,000
0 10,000
0 65,000
0 90,000
787,900
900,000
10,500,000
680,000
150,000
12,230,000
GRAND TOTAL 8,947,400
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