02-14-07 Council Minutes - Laserfiche WebLink

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MINUTES CITY COUNCIL FEBRUARY 14, 2007 Ruff reviewed two bid options noted in the Pre-Sale Report. Option 1 included the 2007 Improvements outlined earlier and requires a bond issue in the amount of $2,205,000. Option 2 adds costs for the Rice Street and County Road B improvements in addition to the 2007 Improvements and requires a bond issue in the amount of $2,770,000. Ruff indicated that staff is recommending Option 1. The bond issue would have aten-year term, and the City would have the ability to pre-pay the bond after five years. Ruff also explained that given the City has not received a bond rating for awhile, Moody's would review the City's current A2 rating. The higher the bond rating, the lower the interest costs to the City. Ruff explained the bond rating system and the review process which includes a review the amount of City debt, wealth of its citizens, employment diversity, City management, and reserve balances. Keis asked why the City is proposing to bond for 2007 Improvement costs when it has not bonded for other improvements in recent years. The City Administrator reported that in recent years the City has financed improvements internally. However, given the size of this improvement, internal financing would put to much strain on the City's reserves. The Administrator pointed out that in addition to bond revenues, some of the other funding sources for this improvement are State and County grant dollars, MSA funds, as well as assessments. Ruff noted that given the cost of improvements in the last several years as well as the financial climate, it was a wise decision to finance those improvements internally. However, at this time, a bond sale is most prudent for the City. Blesener asked for a review of Options 1 and 2. The City Administrator indicated that in addition to the 2007 Improvements, Option 2 adds $600,000 for interim improvements to the Rice Sh•eet/County Road B intersection. The Administrator explained that when Met Council was considering the construction of a park and ride at this intersection, concern was expressed with the functionality of the intersection, the negative impact a park and ride would have on an already difficult intersection, as well as the impact that the St. Jude expansion would have. Based on the St. Jude impact to the intersection, MN DOT was considering interim improvements until such time as the Rice Street Bridge could be reconstructed. Design work for the interim improvements is estimated at $50,000 with the work itself estimated at $550,000. The Administrator indicated that the City offered St. Jude the option of including these costs in the bond issue with St. Jude tax abatement dollars to be used to recover the costs. St. Jude has not agreed to this prior to tonight's meeting. As a 2