04-14-2014 Council Minutes - Laserfiche WebLink

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MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, April 14, 2014 7:00 o’clock p.m. _____________________________________________________________________________________ Page 27 of 30 (18. POLICE GARAGE AND ADDITION PROJECT, 2750 KELLEY PARKWAY, Continued) (b) Supplemental Capital Improvement Plan and Confirm Intent to Issue Bonds - (Public Hearing) – RESOLUTION NO. 6385, Continued Olson stated in the 2008 general obligation street reconstruction bonds, those bonds were sold for $4.5 million. As part of that project, some water and sewer work was completed. In 2013, the tax levy was $178,150, but the City also had contributions totaling $155,000 from the water and sewer funds. The total debt service that was paid for on those bonds amounted to $333,000, with the tax levy only being increased by $178,000. Olson stated that is the exact same scenario that is being discussed here, with the general obligation bonds being backed by taxes but with the City having a fairly stable alternate funding source that is being taken advantage of. Olson stated the next slide shows the City’s annual debt levy that is anticipated with the new bond issue. In 2014 the debt levy will be $755,500, fairly flat in 2015 and 2016, and then increase to $760,000 in 2017 all the way through 2022 where it then starts dropping down again. Olson stated the total debt service levy is slightly higher with the project. McMillan opened the public hearing at 9:41 p.m. Dennis Walsh, 1354 Rest Point Circle, stated he would reiterate that this is a fast public process with little public input. Walsh stated what strikes him after speaking with the City Administrator and the Police Chief and then hearing the Finance Director’s comments is that there are a number of assumptions being made on the revenue to be generated from the police service contract, especially in the latter years. Walsh noted the police station project is estimated to cost $3 million but that no one from the public has seen the math on how that breaks out and that he would be interested in seeing that information. Walsh noted the $330,000 that was used upfront to pay for this project was also used to reduce the levy, which means that it is being counted twice. Walsh stated the $330,000 artificially reduces the levy and is somewhat disingenuous. McMillan noted the $330,000 is in a CIP fund currently and has not been used. Walsh asked why that $330,000 is not being used to pay down the debt. McMillan indicated it will be used to pay for the debt service on the police garage. Walsh stated he was told that it was already used to reduce the levy. Loftus indicated it will be used in 2014 and 2015 to keep the levy level. McMillan stated every year that money is made on the police contract it will go into that fund. Walsh noted that is an assumption that is being made. Walsh asked why the police bond is not being separated out and paid for early if the department is making money off of the service contract. McMillan stated 15 years is a common term for bonds and that the City is also attempting to capitalize on the low interest environment. In addition, the City’s water fund is being tied into the project.