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<br />MINUTES OF THE
<br />ORONO CITY COUNCIL MEETING
<br />Monday, December 13, 2010
<br />7:00 o'clock p.m.
<br />(5. CONSIDER THE AWARD OF THE SALE OF GENERAL OBLIGATION STREET
<br />RECONSTRCTION, STATE AID AND CAPITAL IMPROVEMENT BONDS, Continued)
<br />was an improvement over the two bids that were received a couple'of weeks ago by their firm on some
<br />other highly rated bonds.
<br />Drude reported the City's bond rating with Moody's Investor Service is still a AAA rating, which is the
<br />highest rating. During a conference call with Ron Olson, the city administrator, and Jon North from
<br />Ehlers, Moody's analyst indicated they did not have a lot of concerns regarding Orono concerning the
<br />City's management, economics, and debt load, of which the fund balance plays a significant role.
<br />Historically and presently Moody's bond rating is based on the City's finances, which is in excellent
<br />condition.
<br />The interest rates received on the bonds are lower than what the market currently is offering. As it relates
<br />to the Morgan, Keegan bid, they have offered $4,576,719.85 for the $4,460,000 bonds at an interest rate
<br />of 2.857 percent. The net cost to the City is $893,677.22. Subsequent to bid opening, the issue size
<br />decreased to $4,315,000, which has resulted in an adjusted net interest cost of $888,475.07 to the City.
<br />Net proceeds for the projects are $3,150,127.41 at an interest rate of 2.85 percent.
<br />Murphy moved, Bremer seconded, to adopt RESOLUTION NO. 5997, a Resolution Awarding Sale
<br />of $4,460,000 General Obligation Bonds, Series 2010A, Fixing the Form and Specifications Thereof,
<br />Providing for Their Execution and Delivery, and Providing for Their Payment. •
<br />Murphy commended the staff of Orono for their excellent work on maintaining the City's AAA rating and
<br />overall excellent financial condition.
<br />VOTE: Ayes 5, Nays 0.
<br />BUDGET ADOPTION
<br />6. CONTINUATION OF 2011 BUDGET HEARING — ADOPTION OF 2011 BUDGET AND
<br />TAX LEVY
<br />Olson noted the truth -in- taxation meeting was held on December 6, 2010. Two minor changes have been
<br />made to the budget from last Monday, including a correction to a number on the debt service levy relating
<br />to the fire hall bonds, which eliminated $11,000 out of the levy. Olson stated based on the sale of the
<br />bonds today, he would recommend another $11,000 be eliminated from the fire hall bonds.
<br />Olson stated as a result of those changes, the total tax levy required to fund the 2011 budget is $35,880 or
<br />0.77 percent over 2010. In addition, $130,000 from the Community Investment, Fund is being used to
<br />subsidize the bonds. Applying the proposed tax levy to the estimated tax capacity results in a tax rate of
<br />14.904 percent. The majority of the increase over 2010 is as a result of decreasing property values. It is
<br />estimated the City's tax capacity has decreased by approximately 7.53 percent from 2010.
<br />The City experienced a significant decrease in revenue this year of $415,000, which consists of a •
<br />reclassification of the MSA revenue, lower than expected inspection fees, the decrease in police revenues,
<br />and a lower than anticipated interest rate. The budget also includes a one percent increase across the
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