12-15-2009 Council Work Session Minutes

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Orono City Council Committee of the Whole December 15, 2009, 6:15 p.m. Orono City Council Chambers • 4 designs were distributed and discussed. A fifth design comprised of layout pieces that the committee preferred was also distributed. • Council had positive comments about all of the designs and had no specific objections to any of the designs. • While the content can be changed, the layout would be permanent unless the city pays for changes. At some point, an updated city logo could be added and the pictures could be changed. 3. Bond Sale Analysis • Jonathan North of Ehlers discussed the pros and cons of the capital markets. o Political—con;justification for city to spend money can be controversial o Construction bids—pro;very favorable project bids have been coming in for other cities o Interest rates—pro;42 year low in rates was seen in October � City should review the draft CIP and upcoming projects. • Council noted that if projects are already on the CIP, moving the project to an earlier time may be justifiable. • Concern was expressed that the city's debt service is the highest it's been with a decreasing tax base and revenues. There are many unknown factors related to high-end residential markets and it may be better to wait until the economy improves before the city commits to additional debt. • Olson stated the next two major street projects are on Orono Orchard Road ($1.5 million) and Webber Hills ($200,000-300,000) as well as the non-MSA portion of Willow Drive. • North commented that the BBI is assuming rates will be relatively stable absent any major events. • Council questioned if there are available funds that could be used to buy-down the costs of projects. • Orono's debt service isn't high compared to other cities of similar size. The city has traditionally been very conservative. There may be some advantage to borrowing money at a low interest rate and prioritizing upcoming projects. • City Hall,the Navarre fire station, Big Island Park and the Pavement Management Plan are Orono's largest bond obligations. • Ron Olson will put together an analysis of existing bond debt and potential projects for the next 7-10 years. Council will continue to discuss the purchase of additional bonds. The new City Administrator has indicated that she would like to be involved as we continue to update the CIP. • North noted that long-term financial planning is a common topic in cities and depressed market values should be expected for another year. 4. Utility Rate Study Presentation • Jonathan North noted that Ehlers has a public finance seminar every year on long term financial planning and Ron Olson will be participating as a panel member in the utility rate study discussion. • The utility rate study was done using information from the draft CIP through 2016. Three funds including Water, Sewer and Stormwater were analyzed. • Water Rates Water rate structure goals are designed to: o Cover costs o Distribute cost across users consistently o Treat users equally (Navarre & Highway 12 areas) Page 2 of 4