HomeMy WebLinkAbout[06] CIP Bonds Hearing 11 Council Agenda Item 06
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MEETING DATE: February 1, 2016
AGENDA ITEM: Public Hearing - Capital Improvement Plan—Government Center
SUBMITTED BY: Finance
BOARD/COMMISSION/COMMITTEE RECOMMENDATION: None
PREVIOUS COUNCIL ACTION: Council adopted the 2016 Budget/Capital Improvement Plan.
Council authorized bidding the Government Center.
BACKGROUND INFORMATION: The City relies on the assistance of Monte Eastvold of Northland
Securities and Mary Ippel of Briggs and Morgan to help determine the bonding type and process for
projects undertaken in the City. The City would have different alternatives for bonding the Government
Center. In reviewing the financial options issuance of GO Capital Improvement Bonds (CIP)has the
lowest interest rate; therefore that is the option that is being forwarded to the City Council.
Minnesota Statute §475.521 allows GO CIP bond funding for certain capital improvements of city
buildings. The statute provides strict requirements to follow to qualify a project for GO CIP bond
funding. The enclosed CIP 2016-2020 amendment addresses the requirements of issuing GO CIP debt to
construct a new Government Center for administration,police and Council.
The enclosed hearing notice was published January 15"', 2016 in the St. Joseph Newsleader.
The capital improvement plan and proposed bonds are the maximum issuance amount. The estimated
debt schedule for a$5,035,000 bond issue is located in Appendix B of the CIP document. The final bond
issue is expected to be lower after proceeds from the sale of the current building are received. In addition,
the bids may come in more favorable than current estimates. City Council will have the opportunity to
adopt a resolution for the final bond amount as the project progresses.
BUDGET/FISCAL IMPACT: $5,035,000 bond issue
ATTACHMENTS: Request for Council Action—Government Center CIP/Bonds
Public Hearing Notice
Resolution 2016-004
Five-Year Capital Improvement Plan—Government Center
REQUESTED COUNCIL ACTION: Adopt Resolution 2016-004 approving Issuing GO Capital
Improvement Bonds and Adopt the Capital Improvement Plan for the Government Center.
CITY OF ST. JOSEPH
NOTICE OF PUBLIC HEARING ON INTENTION TO ISSUE
GENERAL OBLIGATION CAPITAL IMPROVEMENT PLAN BONDS
AND THE PROPOSAL TO ADOPT A CAPITAL IMPROVEMENT PLAN THEREFOR
NOTICE IS HEREBY GIVEN, that the City Council of the City of St. Joseph, Minnesota
(the "City"), will meet on February 1, 2016, at 6:10 p.m. at the City Hall, 25 College Avenue
North, in St. Joseph, Minnesota, for the purpose of conducting a public hearing on (a) the intention
to issue general obligation capital improvement plan bonds in an amount not to exceed $5,035,000
and (b) the proposal to adopt a capital improvement plan therefor. The proceeds of the bonds will
be used to finance the acquisition, construction and equipping of a new city hall and public safety
facility to be located in the City.
All persons interested may appear and be heard at the time and place set forth above.
If a petition requesting a vote on the issuance of the bonds is signed by voters equal to five
percent of the votes cast in the City in the last municipal general election and is filed with the City
within thirty days after the public hearing, the bonds may only be issued upon obtaining the
approval of the majority of the voters voting on the question of issuing the bonds.
Individuals unable to attend the public hearing can make written comment by writing to the
City Administrator, St. Joseph City Hall, 25 College Avenue North, St. Joseph, Minnesota 56374.
Written comments must be received prior to the date and time of the public hearing.
BY ORDER OF THE CITY COUNCIL
/s/Judy Weyrens
City Administrator
CITY OF ST. JOSEPH, MINNESOTA
RESOLUTION 2016-004
EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL
CITY OF ST. JOSEPH MINNESOTA
HELD: February 1, 2016
Pursuant to due call and notice thereof, a regular or special meeting of the City Council
of the City of St. Joseph, Minnesota, was duly called and held at the City Hall in St. Joseph,
Minnesota on February 1, 2016, at 6:10 p.m. for the purpose, in part, of giving preliminary
approval to the issuance of general obligation capital improvement plan bonds and adopting the
capital improvement plan.
The following members were present:
and the following were absent:
Member introduced the following resolution and moved its adoption:
RESOLUTION GIVING PRELIMINARY APPROVAL TO THE ISSUANCE OF
GENERAL OBLIGATION CAPITAL IMPROVEMENT PLAN BONDS IN AN
AMOUNT NOT TO EXCEED $5,035,000 AND ADOPTING THE CITY OF ST. JOSEPH,
MINNESOTA, CAPITAL IMPROVEMENT PLAN FOR THE YEARS 2016 THROUGH
2020
A. WHEREAS, the City Council of the City of St. Joseph, Minnesota(the "City")
proposes to issue its general obligation capital improvement plan bonds (the "Bonds") and adopt
the City of St. Joseph, Minnesota, Capital Improvement Plan for the Years 2016 Through 2020
(the "Plan"); and
B. WHEREAS, the City has caused notice of the public hearing on the intention to
issue the Bonds and on the proposed adoption of the Plan to be published pursuant to and in
accordance with Minnesota Statutes, Section 475.521; and
C. WHEREAS, a public hearing on the intention to issue the Bonds and on the
proposed Plan has been held on this date, following published notice of the public hearing as
required by law; and
D. WHEREAS, in approving the Plan, the City Council considered for each project
and for the overall Plan:
1. The condition of the City's existing infrastructure,including the projected
need for repair and replacement;
2. The likely demand for the improvement;
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3. The estimated cost of the improvement;
4. The available public resources;
5. The level of overlapping debt in the City;
6. The relative benefits and costs of alternative uses of the funds;
7. Operating costs of the proposed improvements; and
8. Alternatives for providing services more efficiently through shared
facilities with other local governmental units; and
E. WHEREAS, the City Council has determined that the issuance of general
obligation capital improvement plan bonds in the aggregate principal amount of up to $5,035,000
is the best way to finance the capital improvements identified in the Plan.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of St. Joseph,
Minnesota, that:
1. The City hereby ratifies the actions of the City Administrator in causing
the publication of the Notice of Public Hearing to be published in the City's legal
newspaper as required by law; and
2. The City hereby adopts the Plan and authorizes the issuance of up to
$5,035,000 aggregate principal amount of general obligation capital improvement plan
bonds.
The motion for the adoption of the foregoing resolution was duly seconded by member
and, after full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
whereupon the resolution was declared duly passed and adopted.
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STATE OF MINNESOTA
COUNTY OF STEARNS
CITY OF ST. JOSEPH
I, the undersigned, being duly qualified and acting Administrator of the City of St. Joseph,
Minnesota, do hereby certify that I have carefully compared the attached and foregoing extract of
minutes with the original minutes of a meeting of the City Council, duly called and held on the date
therein indicated, which are on file and of record in my office, and the same is a full, true and
complete transcript therefrom insofar as the same relates to a resolution giving preliminary
approval to the issuance of the City's general obligation capital improvement plan bonds and
adopting the City's capital improvement plan therefor.
WITNESS my hand on February 1, 2016.
City Administrator
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City ... IIIIMfirunesota
Stearns iii
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Five-Year Capital Improvement Plan
Government Center
Table of Contents
I. Introduction........................................................................................................................2
11. Purpose...............................................................................................................................2
111. The Capital Improvement Planning Process................................................................. 3
IV. Project Summary............................................................................................................. 3
V. Financing the Capital Improvement Plan..................................................................... 5
ProjectCosts.................................................................................................. Appendix A
Proposed CIP Bond Issues........................................................................... Appendix B
Pre-Sale Schedule....................................................................................... Appendix C
Pagel
CITY OF ST. JOSEPH
FIVE-YEAR CAPITAL IMPROVEMENT PLAN
2016 THROUGH 2020
I. INTRODUCTION
In 2003, the Minnesota State Legislature enacted legislation that authorized municipalities
to issue debt for projects identified in the City's Capital Improvement Plan (CIP)without first
requesting voter approval through a referendum. Before this legislation, issuance of debt
for projects such as City Hall, libraries and public safety facilities would require voter
authorization by means of referendum.
II. PURPOSE
A capital improvement is a major expenditure of City funds for the acquisition or
improvement to public lands, buildings, such as a city hall, libraries, public safety, or public
works facility,which has a useful life of five years or more.
For the purposes of Minnesota Statutes, Section 475.521, capital improvements do not
include light rail transit or related activities, parks, road/bridges, administrative buildings
other than city hall, or land for those facilities. However,this plan includes certain
additional capital improvements beyond the scope of this statute. A Capital Improvement
Plan (CIP) is a document designed to anticipate capital improvement expenditures and
schedule them over a five-year period so that they may be completed in the most efficient
and cost effective method possible. A CIP allows the matching of expenditures with
anticipated income. As potential expenditures are reviewed,the City considers the benefits,
costs, alternatives and impact on operating expenditures.
The City of St.Joseph, Minnesota (the "City") believes the capital improvement process is an
important element of responsible fiscal management. Major capital expenditures can be
anticipated and coordinated so as to minimize potentially adverse financial impacts caused
by the timing and magnitude of capital outlays. This coordination of capital expenditures is
important to the City in achieving its goals of adequate physical assets and sound fiscal
management. In these financially difficult times,good planning is essential for the wise use
of limited financial resources.
The CIP is designed to be updated on an annual basis. In this manner, it becomes an
ongoing fiscal planning tool that continually anticipates future capital expenditures and
funding sources.
III. THE CAPITAL IMPROVEMENT PLANNING PROCESS
The City adopted the first Capital Improvement Plan in 2004. When the plan was developed
the Council and staff participated in a Planning Workshop to discuss the existing
infrastructure, staffing needs and the future landscape for the City. From this workshop a
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Capital improvement Plan was developed. The CIP was presented to the City Council who
reviewed the projects, prioritized, and considered fiscal impact, and available funding. At
this time the final plan was prepared and a public hearing was conducted to solicit public
comments. Adoption of the capital improvement plan will followed the public hearing.
The City Council prepares a plan based on the available funding sources. If general
obligation bonding is necessary,the City works with its financial advisor to prepare a bond
sale and repayment schedule. Over the life of the CIP, once the funding, including proceeds
from the bond sales, becomes available the individual capital expenditures can be
completed.
In subsequent years,the CIP is reviewed and amended as the City grows and needs change
and expand. To help assure that the City is prepared for future needs, the CIP encapsulates
five years.
For a City to use its authority to finance expenditures under Section 475.521, it must meet
the requirements provided therein, including publication of hearing notice. In addition, the
City Council must approve the sale of capital improvement bonds by a three-fifth majority
vote of all members. The City Council approves bond issuance following the public hearing.
Although a referendum is not required, a reverse referendum is allowable. If a petition
bearing the signatures of at least five percent of the votes cast in the last municipal general
election requesting a vote on the issuance of bonds is received by the municipal clerk within
thirty days after the public hearing, a referendum vote on the issuance of the bonds shall be
called.
IV. PROJECT SUMMARY
The expenditures to be undertaken with this CIP are limited to those listed below. All other
foreseeable capital expenditures within the City government will come through other
means. The following expenditures have been submitted for inclusion in this CIP:
2016 Expenditures
The City of St.Joseph intends to build a government center to the West of the community
center to house police services, administration and council chambers. The City intends to
issue General Obligation Capital Improvement Bonds, Series 2016A to finance the
construction project. The City already owns the land where the proposed government
center is scheduled to be constructed.
2017 Expenditures
None anticipated at this time.
2018 Expenditures
The City of St.Joseph plans to build a cold storage building for public works equipment and
vehicle storage to the north of the current public works facility. The City will consider
issuing General Obligation Capital Improvement Bonds to finance the construction of the
new building.
2019 Expenditures
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None anticipated at this time.
2020 Expenditures
None anticipated at this time.
The statute has established certain criteria that must be met. Under these criteria,the City
has considered the following eight points:
1. Condition of the City's infrastructure and need for the project.
2. Demand for the improvement.
3. Cost of the improvement.
4. Availability of public resources.
5. Level of overlapping debt.
6. Cost/benefits of alternative uses of funds.
7. Operating costs of the proposed improvements.
8. Options for shared facilities with other cities or local governments.
The City has analyzed the eight points required per statute for the project. Their findings
are as follows:
Project: Build a new government center on the land purchased by the City next to the
community center.
Description:The City Council reviewed options for locations and needs of a government
center to include city administration, police services and council chambers. A facility
committee was commissioned to assist with identifying the community needs. The
committee consisted of residents, council members and city staff. In August 2015, the City
purchased the Colts Academy from the St. Cloud School District for a community center.
Along with the purchase was over 15 acres of land. After the City purchased Colts Academy,
the facility committee recommended the City Council secure an appraisal on the current City
Facility with anticipation of selling the property. The Facility Committee determined that
creating a campus was more cost effective that owning multiple buildings. On August 17,
2015 the City Council accepted the recommendation of the facility committee and ordered
an appraisal of the existing City Facility. The appraisal has since been received and the City
is waiting from an interested party to submit a formal purchase agreement. At their January
4, 2016 council meeting, City Council approved recommendations from the facilities
committee to complete construction documents and let bids for a 19,525 square foot
government center at the Colts Academy site. Bidding is scheduled for March 2016 with
construction beginning as early as mid-April. The current government center is planned to
be sold to an interested buyer for the appraised value.
Conditions of City Infrastructure and Need for the Project
The City offices and the police department moved into the existing facility in 2000. The
building was purchased from Sentry Bank to meet police and city accommodations,while
maintaining a downtown presence. The current facility no longer meets the space and
layout needs for the current functions. In addition, significant mechanical repairs and safety
upgrades are necessary. With the lot space available, it was determined that either a new
facility on the current site or a new site is the best option to meet current and future city
needs for the next 30-50 years.
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The City issued bonds in 2011 to upgrade the mechanical systems in the government center.
Keyless entry was also to be added. In 2014 the City hired a facilitator to work with
interested residents to establish the needs of the City for facilities and space and then
prioritize the established needs. When the committee completed their analysis, a formal
report was submitted to the City Council identifying the top two needs of the City were
developing a community center and providing a public safety facility. From this report
discussions began on the future of the government center and whether or not the space and
function of the building would continue to meet city needs well into the future. The
mechanical repairs and keyless entry were postponed until the facilities committee
completed their work. The money remaining in the capital fund for these repairs/upgrades
will be transferred to the new facility.
The current facility is in sound condition for other entities. The City has received interest
from a developer to purchase the existing property contingent upon the City relocating the
government center. The proceeds from the potential sell would draw down the bond
amount on a new government center facility.
Demand for the Project
The Committee that reviewed the facility needs of the City toured the existing City facility
and determined the current facility does not have proper space for police interrogation,
evidence storage, processing, overall function. Administration has created an office space
to accommodate staff, but not at the best flow of operations and does not have room for
additional staff. The council chambers does not hold many residents and has been an issue
for some meetings such as assessment hearings and project developments. The council
chambers is in the basement of the building creating some logistics and safety concerns.
Remodeling the building is an option, but will not provide the space needed to
accommodate all needs. Also, plumbing, electrical and mechanical work make remodeling
costly and less favorable.
Another significant concern is safety. The current government center does not provide
safety for staff or visitors in either administration or police departments. The council
chambers does not provide ample escape routes in case of fire or hostile attacks.
Estimated Cost of the Project
The project improvements will not exceed the par bond amount less issuance costs. The
total bond amount is estimated to be not more than $5,035,000. The bond issue may be
less depending on the sale of the current facility and possible use of local option sales tax
revenue reserves.
Availability of Public Resources
The project will be funded by a general property tax levy.
Relative Costs and Benefits of Alternative Uses of the Funds
A purchase agreement was received for the current building. The Council hired an appraiser
to evaluate the value of the current building. The appraisal supported the sell price range
offered in the purchase agreement. If the sell goes through,the proceeds from the sell
would offset the bond issue project costs.
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Operating Costs of the Proposed Improvements
The operating costs are reviewed annually through the City's budget cycle. Options for
efficiency of HVAC, construction, plumbing, electrical are being considered in the
construction documents.
Options for Shared Facilities with Other Cities or Local Governments
The new government center will have options for Gold Cross Ambulance service and Stearns
County Sheriff's to use space and provide a presence in the City. Other service groups, such
as the St.Joseph Quilters, St.Joseph Senior Citizens, Historical Society(to name a few) may
have an option to use the facilities.
Level of Overlapping Debt
Taxing Unit 2015/2016 Net Tax Capacity Est. GO Debt 12-31-15
Stearns County $125,166,376 $12,590,000
St. Cloud ISD 742 $71,085,363 $3,320,135
Stearns County HRA $125,166,376 $1,340,000
V. FINANCING THE CAPITAL IMPROVEMENT PLAN
In the financing of the CIP,two statutory limitations apply. Under Chapter 475,with few
exceptions, cities cannot incur debt in excess of 3%of the assessor's Taxable Market Value
(TMV)for the City. In the City the TMV is$314,447,800. Therefore, the total amount of
outstanding debt cannot exceed $9,433,434. As of December 31, 2015,the City had
$1,020,000 of debt subject to the legal debt limit leaving a debt margin of approximately
$8,413,434.
Another limitation on bonding under the CIP Statute (475.521) is that without referendum,
the total amount that can be used for principal and interest in any one year for CIP debt
cannot exceed 0.16%of the TMV for the City. For the City,the limit of CIP debt is
$503,116 ($314,447,800 x.0016).
The principal and interest payments for the Series 2016 Bonds will have a maximum annual
payment of approximately$339,000.
Under the CIP,the City will secure approximately$5,035,000 in twenty-year general
obligation bonds in the year 2016 to finance a government center. The par amount of the
Series 2016 Bond is based on the amounts listed in Appendix A.
Continuation of the Capital Improvement Plan
The City Council acknowledges the importance of financial management and therefore
reviews the CIP annually as part of the budget process. The review of the CIP provides the
City Council with an overview of infrastructure and development allowing for prioritization
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of projects, placing funding where it is most beneficial. Occasionally a need will arise that
has not been included in the CIP causing the City Council to amend the CIP.
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APPENDIX A
PROJECT COSTS
(Capital Expenditures to be Funded with Bond Proceeds)
2016 Expenditures
• Government Center$4,900,000
2017 Expenditures
• No project identified at this time
2018 Expenditures
• Public Works Cold Storage Building$400,000
2019 Expenditures
• No project identified at this time
2020 Expenditures
• No project identified at this time
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Proposed Debt Service Schedule
CITY OF ST..069EPK MINNESOTA
0,01,CAPITAL IM FIKOVEMENT PLAN BONUS OF 2011
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k#w#V1 V#bf 5 00%
Ypar f��q( RA14 Inforost Pwmioof Govarvo,
2016 (1 000% 67 �4 V t
2G17 2015.000 120% 134�7[18 319:709 359,0393
2015 206,000 1 40% 132,240 537,248 364.1113
2010, 210,000 160% 12%,378 339,379 3W346,
2020 210,000 110% 126,010 334,1315 35201$
2021 215,000 1,90% 1122,U3 317,343 354,210
2022 220,000 U3% 11118,250 338,235 336,170
2023 226,000 220% 113,748 33B,740 355,665
2024 2317,1110 2,331% 1108,790 336,7)5 35d,*7
2025 233,000 250% 103,303 339,303 355,312
2026 240,000 245% VIVO 337,610 U4,10�
2027 20,000 280% 01,158 341,tSB 358,215
2020 2153,000 210% 414,1511 339,158 sool 16
2029 2131 ,13 36, O% 76,70 3,36,763 353,601
2030 27C,000 3,10% M,963 33k,W9 365,9,11
2031 2&C,000 11.696 W,593 340,503 357,622
2032 285,00D 3,25% 51,773 336,773 353,511
20,33 225,000 330% 42,510 3,17,610 354,3.66
2034 305,0011, &40% 32,776 337,776 364A64
2033 315,000 3,06% 22,405 331',43 364,275
2013 325,000 335% 1'1„63+3 3 KOO 353,.V4
2037 0 0,00% a 0 a
5,036,000 1,77,391 6,831,191 7,IV,,239
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APPENDIX C
Proposed Five-Year City Capital Improvement Plan/Bond Issuance
City of St.Joseph, Minnesota
The City Council must take the following actions before bonds can be issued:
• City Council authorizes the preparation of a five-year Capital Improvement Plan
• City Council conducts a public hearing on the issuance of bonds and the Capital
Improvement Plan
• City Council approves the bonds and Capital Improvement Plan by at least a three-fifths vote
of the Council membership
The table below lists the steps in issuing process. Please not this proposed timetable assumes regularly
scheduled City Council meetings.
Jan. 4, 2016 Council approves government center design and approval for construction documents
and bidding.
Jan. 15, 2016 Publish Notice of Public Hearing on the Capital Improvement Plan with consideration of
bond funding. Financial Bonding Plan sent to the City.
Jan. 18, 2016 Close date to get Notice of Public Hearing on the Capital Improvement Plan with
consideration of bond funding
Feb. 1, 2016 Public Hearing—Resolution Approving the Capital Improvement Plan Adopted (3/5 vote
required)
Mar. 3, 2016 Reverse referendum period ends
Mid-Mar. 2016 Bid opening for government center project
Apr. 4, 2016 Bid awards considered by Council.
May 2016 Credit ratings assigned
Jun. 6, 2016 Council approves Resolution issuing General Obligation Capital Improvement Bonds,
Series 2016. Public Sale of the Bonds.
July 2016 Bond closing/receipt of funds
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