04-14-1980 Council Minutes - Laserfiche WebLink

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R�GULAR MEETING OF THE ORONO COUNCIL, APRIL 14 , 1980 Page 23 Dick Benson, City Administrator, presented th� FINANCING PROPOSED City Council with a memo prepared by Tom Kuehn, SEWER PROJECTS Finance Director, regarding possible financing for sewer construction p�.-rojects, dated April 11, 1980 , which states : I have reviewed the alternative to financing the North Shore Drive and Minnetonka Bluffs/�aest Ferndale sanitary sewer projects during 1980. Between the time of beginning construction and the time that permanent financina is established, the City may loan from other funds to the construct- ion fund. At this time , the only fund with sub- stantial available monies is the Sewer Debt Fund. I have reviewed the procedures briefly with Phil Chenoweth of Ehlers , the City' s financial consultant. If we decide to borrow sewer debt monies, the loan should be treated as a temporary improvement bond. Alsoa these "bonds" should bear interest at the going rate. At this time, that interest rate would be 7o per annum (the State ceiling for municipal bonds) . The bonds would be due within three years , but permanent financing should be established as soon as possible. The maximum amount we could borrow would be that amount which would not be needed for debt service requirements within the three year term of the temporary bond �� issue. At this time, I estimate that we have from $500 , 000 to $550, 000 on monies available for loan purposes. However, I must advise extreme caution at this time if we consider this aoproach. It must be remembered that the issue could run only three years, and before the end of the three years period, permanent financing would have to be obtained. , Mr. Chenoweth stated that the market has been saturated with temporary issues and that means there will be many issues requiring permanent financing at the same time as ours. If perr.ianent financing were available now, we could issue special assessment improvement : bonds and assess that portion of the costs by which the various properties were benefited. This would require an appraisal of the property before and after the project. The balance of the costs , if any, could be put on a general tax levy. The City levies about $22 , 000 annually for bonded debt now. The per capita levy limit (based on the latest �ederal census) for bonded debt is $54. 00 generally. With a population of 6 , 787 in 1970 , this means . we could levy up to $366 , 498 for payment of bond principal and interest.