04-06-2020 Council work Session Packet

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WS – Item 5 WORK SESSION STAFF REPORT Work Session Item No. 5 Date: April 6, 2020 To: City Council From: Sarah Cotton, Finance Director Re: Bond Issuance for Water Tower No. 3 Background On August 26, 2019, the City Council accepted bids and awarded a construction contract for the 2019 Water Tower No. 3 Project. Water Tower No. 3 is a 1.5 million gallon (MG) composite tower located off Birch Street and Centerville Road (City Property). In order to finance these improvements, the City planned to issue General Obligation Utility Revenue Bonds. On September 9, 2019, the City Council adopted a resolution declaring the intent to reimburse from future bond proceeds. The Internal Revenue Code requires cities to declare their intent to reimburse project costs incurred prior to receipt of bond proceeds. Preliminary expenditures such as architectural, engineering, surveying, bond issuance, and similar costs are exempt from this provision. Staff has had preliminary discussions with Terri Heaton, Baker Tilly, regarding the issuance of bonds to finance Water Tower No. 3. Terri will be joining the meeting virtually to present and discuss the bond issuance process and proposed calendar, as well as answer any questions that the City Council may have relative to the financing recommendations. Total project cost, based on bids awarded and a construction contingency of 5%, is approximately $4,682,367. The General Obligation Utility Revenue Bonds will be repaid over a 15-year period by utilizing revenues from the City’s Area and Unit Trunk Utility fund. Attachments General Obligation Utility Revenue Bonds, Series 2020 Scenario Requested Council Direction For informational purposes only. No action is required at this time.