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MINUTES <br />CITY COUNCIL <br />AUGUST 14, 2013 <br />Mark Ruff, Ehlers Associates, estimated interest rates for a bond sale at 3.0% <br />to 3.25% fixed for the life of the bond issue. He pointed out that the bond <br />could be paid off early or refinanced to get a lower rate after 9 years. Ruff <br />indicated that with 2014 levy limits, levies associated with debt are outside of <br />those limits. Ruff also indicated that if the City decided to pursue a Capital <br />Improvement G.O. Bond, it would have to go through a capital improvement <br />planning process. This process involves holding a public hearing and if the <br />City receives a petition signed by 5% or more of the number of votes cast in <br />the last election, then the project would go to a referendum. The city could <br />forego this process if the petition is received and it moved to another option, <br />either paying cash for the project or financing through a G.O. Revenue Bond. <br />The G.O. Revenue Bond would not be outside of levy limits, however. <br />Keis asked if it would require an increase in water and sewer rates to support <br />debt service for G.O. Revenue Bond. The City Administrator indicated that <br />the City would fund depreciation to make the debt service payments and still <br />be able to provide some dollars into the Water & Sewer Capital Replacement <br />Fund. Blesener noted that the City has been funding depreciation as a way to <br />pay for a new Public Works garage. The Administrator agreed and noted that <br />these dollars would also be used to pay the cost of painting the water tower, <br />as well as any other water and sewer capital expenses. <br />The City Administrator suggested that if the decision is to utilize a Capital <br />Improvement G.O. Bond to finance the Public Works garage project, that the <br />City inform the public the reasons why this financing mechanism is being <br />considered. The public should also be informed that there are other methods <br />to finance the project, but CIP G.O. Bond is outside levy limits. Todd Hagen, <br />Ehlers & Associates, indicated that his experience is that the public does not <br />petition for the reverse referendum for essential public projects of this nature. <br />The Council agreed that the general public should be provided as much <br />information about the project and financing options as possible. <br />McGraw asked the timeline for the project. Ruff recommended that the <br />hearing process occur within the next couple of months. Once the hearing is <br />held, there is a 30- day time period within which a petition could be submitted <br />initiating the reverse referendum process. The City would then know by the <br />end of November if a CIP G.O. Bond could be sold. Ruff also suggested that <br />the City go out to the bond market in January of February of 2014, suggesting <br />that this may be time period when the rates would be most favorable to the <br />City. The City would be able to plan for this levy as part of the 2014 <br />budgeting process. The Administrator again noted that depreciation would be <br />used to make the bond payments, noting that currently the City has been <br />transferring $250,000 in depreciation to the Water & Sewer Capital <br />Replacement Fund, and that amount is projected to grow to $300,000 in <br />2 <br />