05/09/2005 Council Packet - Laserfiche WebLink

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Executive Summary 1 2 funding annual maintenance expenditures whose costs are generally stable in current year dollars. The City could issue General Obligation Bonds to be repaid from property taxes to finance the PMR. A general obligation is an obligation that pledges the full faith and credit of the City to the payment of principal and interest. The statutes require that the issuance of a general obligation bond must be approved by a majority of the voters voting on the question. We developed a projection of the property tax levy and tax rate needed through 2014 to pay for the sealcoating and overlay portion of the PMR on a pay -as- you -go basis and to the pay debt service on General Obligation Bonds issued to finance the reconstruction portion of the PMR each year beginning in 2007 when the first reconstruction project is scheduled to occur based on 5 %, 7.5 %, and 10% growth rates in the City's tax base. These projections showed the tax rate increasing each year as new debt is issued and would result in a tax rate ranging from 5.936% to 9.022% in 2014. This resulted in a maximum property tax impact ranging from approximately $136 to $206 on a home valued at $228,400. Additional tax impacts would continue through 2029 when all the bonds issued would be retired. One disadvantage of this funding source is that tax - exempt properties would not contribute to the funding of the PMR. .A. third alternative, would be to issue General Obligation Improvement Bonds repaid by special assessments. Special assessments are charges a city levies against benefited real property for local improvements. The City can issue General Obligation Improvement Bonds without a referendum provided that at least 20% of the City's share of the project costs are paid for with special assessments. We developed a projection of the property tax levy and tax rate needed through 2014 to pay for the sealcoating and overlay portion of the PMR on a pay -as- you -go basis and to pay the debt service on General Obligation 3 Improvement Bonds issued to finance the reconstruction portion of the PMR 3 each year beginning in 2007 when the first reconstruction project is scheduled to occur based on 5 %, 7.5 %, and 10% growth rates in the City's tax base. 311 These projections showed the tax rate increasing each year as new debt is issued and would result in tax rate ranging from 5.116% to 7.777% in 2014. 3 This resulted in a maximum property tax impact ranging from approximately $117 to $178 on a home valued at $228,400. Additional tax impacts would continue through 2029 when all the bonds issued would be retired. The advantage of special assessments include they are a means of raising money outside general city tax sources, they provide a means of levying charges for 31 public services against propertied otherwise exempt from taxation, and they a charged to the property owner for benefit received. The disadvantages of special assessments are the difficulty of relating assessment charges to the special benefit received. • General Obligation Street Reconstruction Bonds could be used to pay for reconstruction projects where the existing street width is adequate and wherf other elements not currently existing do not need to be added. The City wot need to follow the process prescribed in the enabling statute. The bonds do s r r t n r st e -171 - City of Lino Lakes - Pavement Management Plan Financinc