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HomeMy WebLinkAbout09-27-2021 Council Work Session PacketCouncil Work Session Monday, September 27, 2021 5:00 P.M. Orono Council Chambers, 2780 Kelley Parkway, Orono, MN 55356 WORK SESSION AGENDA 1. Insurance Discussion 2. Crystal Bay Post Office Lease Discussion 3. Bonding for Public Works Facility Council Work Session Monday, September 27, 2021 5:00 P.M. Orono Council Chambers, 2780 Kelley Parkway, Orono, MN 55356 Past Meeting Agendas August 9, 2021  Budget Discussion – Revenue August 23, 2021  Enterprise Budget Discussion  Building Official Discussion  LLFD Command Vehicle Discussion Annual Discussions Timeframe:  Budget: Part of June, All of July, August and October.  City Administrator & Police Chief Update (3 times per year for 15 minutes) MEMORANDUM To: Mayor and City Council From: Ron Olson, Finance Director Date: September 27, 2021 Subject: Insurance (Budget) Discussion Staff has received a 2022 insurance renewal quote that is higher than expected. Staff is currently exploring options to see if there are less expensive insurance plans available to the City. CITY OF ORONO MEMORANDUM DATE: May 10, 2021 TO: City Council FROM: Adam Edwards, P.E., City Administrator/City Engineer RE: Post Office Lease 1. Background. Recent concerns about Crystal Bay Post Office parking drove staff to research the existing lease between the city and the US Postal Service. There has also been some interested from the Parks commission on the future use of the building with respect to the Crystal bay Park and Dakota Trail. 2. Lease. The most recent lease I could find in our files (Exhibit A) dates to 1987. The lease is month to month with and indefinite term. It covers the building at 968 sf and 1000 sf of parking and maneuvering space. The rent is set at $450/month and has not changed since 1987. The city is responsible for facility maintenance. The postal service is responsible for snow and trash removal, utility payments and custodial service. 3. Parking. The current parking lot serves both the post office and the park. Specific spots are not designated/restricted for either use. The only restricted parking is the handicap accessible spot. On nice days in the summer, and particularly with the bridge traffic diversion the parking lot can become fill with trail users. 4. Discussion Items. a. Should the city designate/ restrict specific spots for postal parking? If so how- “postal only”, “Postal only x:xx AM - x:xx PM”, “15 minute parking”… b. Should the City approach the Postal Service about updating the lease? rent? c. Is the council open to exploring future alternative uses for the space? Limited postal services (PO boxes and tamp machine) + Community center? warming house… MEMORANDUM To: Mayor and City Council From: Ron Olson, Finance Director Date: September 27, 2021 Subject: Bonding for PW Building Staff has contacted our Ehlers about bonding for the proposed Public Works building. A recap of the process is included for the Council’s Review. To: Ron Olson, City of Orono From: Nick Anhut, Ehlers Date: September 23, 2021 Re: City of Orono Facilities Financing Future Facility Project Financing The City has identified facilities needs and may consider issuing debt to provide financing for the project(s). MN Statutes gives a City Council the authority to finance substantial renovation, improvement or new construction of a variety of essential purpose facilities using bonds to be repaid from its tax levy. In doing so, the City may utilize its General Obligation (G.O.) pledge which currently carries a “Aaa” credit rating. The G.O. pledge provides the City’s full faith and credit backing to a bond issue, which potentially accesses the lowest interest costs and most favorable bond terms available in the marketplace. This approach to financing is consistent with city practices to bond for large capital projects like public facilities, street reconstruction and other infrastructure. Bonding – Statutory Authority Under Chapter 475 of the Minnesota State Statutes, Cities have options to issue debt subject to approval by referendum or the approval of the governing body using various designated statutory authorities. M.S. Chapter 475.521 provides one such authority for City Councils to approve financing certain essential purpose facilities through what are referred to as “Capital Improvement Bonds” (CIP Bonds). Qualifying facilities are a city hall, library, public safety and public works buildings. Other non-essential function municipal facilities like parks, arts, transit, parking and recreational facilities are excluded. The City must hold a public hearing on the adoption of a Capital Improvement Plan which identifies any projects proposed for financing through general obligation bonds over the next five-year period. It requires publication of a hearing notice in the local paper at least 14, and no more than 28, days prior to the hearing. Further, the council’s authority is also subject to a 30-day petition period starting after the public hearing where voters numbering at least 5% of the votes cast in the last general election may petition to make the bonding subject to a future referendum. The City utilized this statutory authority to finance the Public Safety Annex project in 2014, and included the amount within its General Obligation Bonds, Series 2014A. Bonding Structure and Statutory Limits The total amount of the CIP Bonds being authorized must be designated in the public hearing notice, CIP Plan, and adopting resolution. If a designated project undergoes a change order or other increase in cost that requires a higher bonding amount, a new public hearing process is required. Tax-exempt bonds can be structured for repayment as long as the useful life of the facility or 30 years, whichever is lower. The Council has the flexibility to choose a shorter duration if desired. In any one year, the TOTAL amount of debt service a City may carry for its CIP Bonds is limited to 0.16% of the City’s assessed Estimated Market Value (EMV). The City’s Pay 2021 EMV is over $3.5 billion, meaning the maximum annual amount of debt service the City can carry on all of its CIP Bonds is currently over $5.6 million. The CIP portion of the City’s 2014A Bonds averages $282,040 annually, leaving over $5.3 million of available capacity remaining under the limit. For discussion purposes only, a conservative estimate of the annual levy on a 20-year, $10 million G.O. Bond issued today is $665,000. CIP Bonds are also included in the calculation of the City’s statutory debt limit, set at 3.0% of EMV. In 2021, the debt limit applied to the City is $105 million. As of September 2021, the City only has $3,600,000 of existing debt subject to the statutory debt limit. Reimbursement Regulations Under federal law, a municipality is allowed to use money from its general fund to pay for certain project costs before tax-exempt bonds are issued. This can happen only after passing what is called a “reimbursement resolution” and then filing a declaration of intent to reimburse itself from those subsequently issued bonds. This limitation applies to “hard costs” such as land acquisition, grading, site improvement and construction. Preliminary expenses like design studies and engineering specs are exempted. The declaration must identify the potential capital project it intends to reimburse funds for and the proposed bond amount. The declaration can be adopted as late as 60 days after the initial expenditure intended for reimbursement is made. I look forward to discussing this financing with the City.