Loading...
HomeMy WebLinkAbout06/22/2005 Council PacketWORK SESSION AGENDA CITY OF LINO LAKES Wednesday June 22, 2005 CITY COUNCIL WORK SESSION Community Room (not televised) 5:30 P.M. 1. AUAR Review, DSU (regular agenda item 6A) 2. Communications Plan, Springsted Inc., Himle Horner, Inc. 3. YMCA Financing, Springsted Inc. 4. VLAWMO Restructuring 5. Consider Support of "No Parking" on Sunset Regular Agenda Items Adjourn 3:08:37 PM 6/20/2005 S: \CITY COUNCIL\AGENDAS\2005 WORK SESSION AGENDAS \Work Session 06- 22- 05.doc WS -2 WORK SESSION STAFF REPORT Work Session Item No. 2 Date: Council Work Session, Wednesday, June 22, 2005 To: City Council From: Gordon Heitke, City Administrator Re: Street Reconstruction Communication Plan Background Representatives of Springsted Inc. appeared before the Council at the May 18, 2005 work session to discuss assisting the City with preparing and implementing a communication plan for the purpose of educating the public for the anticipated November, 2005 street reconstruction referendum. It was decided that they would appear before the Council with more information at a future meeting. Attached is a proposed work plan and cost estimates for the project. Representatives from Springsted Inc. and Himle Horner will be present to discuss the proposal. Requested Council Direction Staff is requesting that the City Council provide any further direction to city staff and or consultants and determine whether this issue is to be placed on the regular June 27, 2005 agenda for action. Attachments 1. Springsted Inc. proposal for services 1 Springsted June 20, 2005 Mayor John Bergeson and City Council Mr. Gordon Heitke, City Administrator 600 Town Center Parkway Lino Lakes, MN 55014 -1182 RE: Communications Plan Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101 -2881 Tel: 651- 223 -3000 Fax: 651-223-3002 www.springsted.com Springsted Incorporated proposes to partner with Himle Horner Inc. to provide strategic counsel and assist in the management of public information necessary to communicate with residents and businesses on the adoption and implementation of the Pavement Management Plan for Lino Lakes. This engagement will include: • Designing the public information plan, including messaging, tactics and a timeline • Developing financial estimates and the impact of specific ballot question(s) • Providing counsel for City staff and other contractors on individual implementation steps • Assist City staff in the development and review of communication materials, as requested • Advising the City Council and staff on any additions to the public information plan that will be needed if a fall referendum is authorized. Finally, Himle Horner Inc. will provide an assessment of public information efforts related to street/road improvement projects, including recommendations for future action, to City Council and staff at the end of this contract. Todd Rapp, Managing Director, will serve as the project lead for Himle Horner Inc. on this contract. This engagement is proposed to last from July 15 to November 15, 2005, with a monthly fee of $6,250 plus out -of- pocket expenses. City of Lino Lakes Communications Plan June 22, 2005, page 2 Attached please find the draft Communication Plan for Lino Lakes discussed with City Council at the May 18 workshop. This draft would be customized to the City's needs during the initial phases of the project, if hired. It is attached to provide a conceptual outline of tasks we anticipate will be undertaken as part of the project, subject to further discussion with staff and Council. We are available to further discuss these options further at your convenience. Sincerely, d;:4/ Ave,,/ew Terri Heaton Senior Vice President Attachment Cc: Mr. Alan Rolek, Finance Director Mr. Michael Grochala, Community Development Director Ms. Mary Divine, Economic Development Specialist pingsted City of Lino Lakes, Minnesota Communication & Citizen Awareness Plan Fall Bond Referendum Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101 -2887 Tel: 651- 223 -3000 Fax: 651 - 223 -3002 www.springsted.com Work Plan June 22, 2005 Objective(s) The purpose of this study is to facilitate the development and implementation of a communication and citizen awareness plan for the City of Lino Lakes' fall roads and streets bond referendum. The plan would include actions that lead to informing voters, but would not include marketing and /or promoting bond or referendum approval. Springsted recently completed a Pavement Management Financing plan that identifies financing for the Pavement Management Plan (PMP) completed by the City during 2004. The PMP Study concluded that by completing street sealcoating and maintenance on the most efficient schedule (maximizing investment by maintaining streets on a timely basis so that replacement is delayed until absolutely necessary) the City could save more than $11,000,000 over the next 10 years. The City is required, by its Charter, to hold a referendum for street/road improvement projects that are partially assessed. The City's primary means for financing street improvements is through assessments. Unlike most other cities in Minnesota, the City of Lino Lakes requires referendum approval in order to fully implement the PMP and capture the potential savings. Springsted is partnering with the Himle Horner firm, whose communications expertise complement our skill sets in order to provide the City with the experience and knowledge necessary to meet the City's needs. Our role would be to implement appropriate Communication Plan strategies in order to provide comprehensive information to the voters prior to the referendum. The development of the Communication Plan will rely upon information already developed in conjunction with the PMP financing plan, including: potential funding sources, the impact of any debt service and special assessments by project, and the offsetting impact of the PMP savings on such payments. The methods of city-wide communications would be approved by the City Council. Springsted and Himle Horner will work directly with the City Council to determine the objectives, ballot language, referendum process, and Communication Plan. This work will be completed in conjunction with Bond Counsel. City of Lino Lakes, MN Communication & Citizen Awareness Plan June 22, 2005 TASKS Task I: Review Background Information y Internal review of background information: • Review the City Charter, City ordinances, policies and practices related to special assessments, and other revenue sources for funding street maintenance and reconstruction (This has already been done in conjunction with the PMP) • Review any engineering studies, cost of services studies, and other relevant studies related to street maintenance and reconstruction in the City (already completed as part of PMP Capital Financing Plan) • Review historical information and results related to referendums for street and road projects (partially completed as part of PMP) • Review the City's communication tools utilized to inform voters in past referendums ➢ Meet with City Council and Staff in a workshop session: • Discuss the City Council's goals for the Communication & Citizen Awareness Plan • Review typical referendum communication plans and strategies as well as specific tasks /plans implemented by Staff in the past • Discuss potential Communications strategies • Discuss the effectiveness of each proposed means to disperse information in alignment with the Council's goals • Discuss the measures for effectiveness of the plan • Obtain additional input or information • Discuss the project timetable Clarify that Springsted and Himle Horner will not be marketing, rather informing voters using factual data only Task II: Analyze Communication Plan Components y Develop a comprehensive list of methods for communicating referendum information and evaluate the effectiveness of each to determine which methods to recommend • Determine target audience(s) • Draft the ballot language using consensus of the question from the City Council and obtain input from Bond Counsel v Quantify the impact of assessment and /or tax levy impact on a range of homes that represent properties located within the City including both capital and operating costs (already available as part of PMP financing plan) ✓ Quantify the offsetting impact of the savings derived from implementing the PMP in a timely manner so that costs are for maintenance rather than replacing before necessary. City of Lino Lakes, MN Communication & Citizen Awareness Plan June 22, 2005 v Develop a timeline for implementation of the Plan including specific dates to put in place each method of communication to be used ✓ Coordinate the use of City staff in order to minimize costs and maximize City resources and capacity already in place. V Discuss and agree with staff on how questions from the public will be handled during the pre - referendum phase Task III: Develop Communication Plan • Springsted and Himle Horner will prepare a Draft Comprehensive Communication & Citizen Awareness Plan that will contain our recommendations based on best practices and City direction by staff and the Council ✓ Obtain City Council approval of the ballot language ✓ Obtain approval of the Communication Plan from the City Council after their final revisions and input ✓ Obtain approval for assignment of tasks split between City staff and Springsted staff ✓ Obtain City Council approval of the style and language to be used in information to be distributed to the voters including brochures, legal notices, letters, press releases, flyers, cable advertisements or programming, meeting materials, fact sheets, slideshows and website communications (where possible obtain approval of each final document) ✓ Obtain City Council approval of the specific media to be used to communicate information for the referendum and the frequency of each type ✓ Discuss concerns or issues related to the Plan or the referendum with City Council before implementing the Plan Task IV: Implement Communication Plan V Assign key contact from the City, Springsted and Himle Horner to manage the timetable and coordinate distribution of various communication tools as outlined in the plan • Develop weekly checklist to ensure that each task is performed in a timely manner with sufficient lead time ✓ Implement referendum tax calculator on City's website v. Include time each week for follow -up on responses or issues needing to be addressed (letters to the editor, phone calls indicating misunderstandings, opportunities to clarify information, etc) Expectations ✓ In order to conduct this study, the City will need to designate a staff member to serve as a project manager. This person will be responsible for assisting Springsted with gathering accurate and timely data needed to complete the project and to assist in arranging for required meetings, media liaison, and phone interaction with the public. City of Lino Lakes, MN Communication & Citizen Awareness Plan June 22, 2005 Springsted and Himle Horner Role Y We will strive to: Develop and Implement a Communication & Citizen Awareness Plan as outlined above to inform citizens based on factual data Work for the City Council as a whole, rather than as individuals Use plan as a guide, but modify to address changing needs Limit our Communications to unbiased communications not intended to influence, but to educate Base our success on: - Providing effective coordination with bond counsel, city officials and staff to meet objectives of the Plan - Providing each voter with an opportunity to make and informed decision r Springsted and Himle Horner will not: Market or promote any desired outcome of the referendum other than informed voters (voting yes or no is acceptable) Implement tasks that materially deviate from the plan, unless the Council, as a whole, directs the change Compensation We propose to develop and implement the Communication & Citizen Awareness Plan, as described in this proposal, for a monthly fee of $6250 exclusive of any out -of- pocket expenses such as travel, materials, advertisements, postage and miscellaneous expenses. We would complete work by November 15, 2005 and would prefer to begin no later than July 15, 2005 to enable us to meet the anticipated schedules. Should the City request and authorize additional work outside the scope of services described in this proposal or additional revisions beyond those agreed upon at the discussion and review of the draft report, we would invoice the City at our standard hourly fees. Springsted 2005 Fees Principal, Senior Officer Officer, Project Manager Senior Associate Associate Support Blended Rate $195 $165 $140 $125 $50 $165 City of Lino Lakes, MN Communication & Citizen Awareness Plan June 22, 2005 Nicholas R. Dragisich Executive Vice President Manager of Management Consulting Services Experience As a Client Representative and a Project Manager for Springsted, Mr. Dragisich performs management services studies for clients. He assists clients in areas such as fiscal impact analysis, utility rate analysis, service delivery systems, financial feasibility, financing options, capital improvement programming, and debt management. Prior to joining Springsted, Mr. Dragisich served in three government management positions. Most recently for the City of Spokane, Washington, he served as Assistant City Manager where he managed a staff of approximately 1,000 and a budget of approximately $176 million. While in Spokane, Mr. Dragisich restructured the Operations Division to increase efficiency and responsiveness to customers' needs. The Operations Division encompassed Capital Programs Planning/ G.I.S. Engineering Services, Building Codes, Environmental Programs, General Services, Planning, Solid Waste Collection and Recycling, Transportation, Wastewater and Storm Water Management, and Water and Hydroelectricity. He also served as City Administrator for the City of Virginia, Minnesota for nine years where he managed all City services in addition to the Virginia Regional Medical Center and the Department of Public Utilities and as City Engineer for 13 years. Not only does Mr. Dragisich have several years of public finance and management experience; he also has over 20 years of experience in engineering. He has served as a Project Engineer for a private firm in Northern Minnesota where he managed the design and construction of projects for municipal and private sector clients. Education Professional University of St. Thomas, Minneapolis, Minnesota Master of Business Administration University of Minnesota, Minneapolis Bachelor of Science Civil Engineering Institute of Applied Management and Law Employee Labor Relations Law Course National Development Council Economic Development Professional Course Minnesota Board of Water and Soil Resources Delineation of Wetlands in Minnesota International City/County Management Association American Society of Civil Engineers Registered Professional Engineer in Minnesota and Washington Patricia L. Kettles Assistant Vice President and Client Representative Experience Ms. Kettles joined the Management Consulting Services Group in early 2001. Prior to that she was a Project Manager for the National, Minnesota and Wisconsin Teams where she provided project support services that included structuring debt, reviewing financing options with Springsted's Client Representatives and clients, writing recommendations that explain the plan of finance, reviewing Official Statements as well as legal documents related to financing, and assisting clients with general questions. She brings this experience to the Management Consulting Team where she is able to apply her strengths and technical analysis in completing studies in areas such as, utility rate analysis, fiscal impact analysis, revenue diversification /cost recovery, financial feasibility, financing options, capital improvement programming and debt management. Ms. Kettles has worked with clients in Virginia, Iowa, Minnesota, North Dakota, and Wisconsin. Education University of St. Thomas, St. Paul, Minnesota Masters in Business Administration Curtis L. Carlson School of Management, University of Minnesota, (Minneapolis) Bachelor of Science in Business Affiliations Government Finance Officers Association of the United States and Canada Minnesota Government Finance Officers Association Christine M. Hogan Project Manager Experience Ms. Hogan joined Springsted Incorporated in March 2000, as a Financial Services Analyst, after graduating from the University of St. Thomas. As a Financial Services Analyst, Ms. Hogan managed the arbitrage rebate division, where she used her analysis strengths and customer service skills to ensure that clients comply with federal arbitrage regulations. In addition to performing analytical calculations, she assisted clients with meeting reporting requirements in a timely manner. In her current role as a Project Manager for the Minnesota and Wisconsin Teams, she provides project support services that include structuring debt, reviewing financing options with Springsted's Client Representatives and clients, writing recommendations explaining plans of financing, reviewing Official Statements and other legal documents related to financing, and assisting clients with general questions. Education University of St. Thomas, St. Paul, Minnesota Bachelor of Arts in Business Administration HORNER PUBLIC RELATIONS • CRISIS MANAGEMENT • PUBLIC AFFAIRS TODD RAPP Todd Rapp is the Managing Director at Himle Horner. He provides counsel and strategy in areas of media relations, public affairs, coalition development, grassroots advocacy, and corporate and crisis communications. Prior to joining Himle Horner in 2002, Rapp served as Director of Minnesota Government Affairs for Xcel Energy (formerly Northern States Power Company). In this role, he developed and managed company strategies for legislative affairs in the areas of energy, environment, local governments and tax policy. Previously, Rapp served in a number of key positions in Minnesota government and politics. As the Executive Director for former House Speaker and Majority Leader Phil Carruthers, Rapp served as Carruthers' chief political advisor for four legislative sessions from 1994 through 1997. He also has extensive experience advising candidates and managing campaigns for local and statewide office, including serving as Political Director for the Minnesota DFL Party from 1990 -1993 and Campaign Director for the DFL Senate Majority Caucus in 1996. Terri Heaton Senior Vice President Experience Ms. Heaton joined Springsted Incorporated in May 2002 as a Senior Vice President, concentrating her efforts as principal advisor to cities and counties. She is serving clients in the Midwest, assisting them in attaining their financial goals through effective public finance and economic development, managing operational and structural challenges and developing strong human resource teams. Ms. Heaton has over 19 years of experience in local government finance, most recently as the Chief Financial Officer for the City of Bloomington, Minnesota, where she was instrumental in improving the City's credit rating, ultimately earning an Aaa /AAA bond rating with both Moody's and Standard and Poor's. As a result of her efforts, the City's first popular report, the Corporate Report to the Community, and its budget document continue to receive GFOA awards annually. Ms. Heaton was also the Chief Financial Officer for the City's economic development arm, the Bloomington Port Authority. She negotiated and administered development contracts, including the Mall of America tax increment financing project. She facilitated bond defeasances and bond refundings, resulting in present value savings in excess of $30 million. As the City's Treasurer, she had responsibility for the $150+ million combined portfolio of the City, Port Authority and Housing Redevelopment Authority. She developed capital financing plans for over $75 million in municipal public facilities. Ms. Heaton served as an internal project manager, focusing on technology initiatives, streamlining business processes and conducting several studies. Previously, she worked for the Office of the State Auditor, conducting audits of schools, counties, cities, pension funds, agencies, and non - profit corporations. Education University of St. Thomas, Saint Paul, Minnesota Master of Business Administration Affiliations Saint Cloud State University, Saint Cloud, Minnesota Bachelor of Science in Accounting Government Finance Officers Association, National and State Associations League of Minnesota Cities, Fiscal Futures Committee Association of Metropolitan Municipalities Association of Government Accountants, Certified Government Financial Manager Professional Certified Public Accountant Certified Government Finance Manager Craig R. Rapp Vice President Experience As a Vice President and Client Representative for Springsted, Mr. Rapp provides overall financial and management consulting to clients. He particularly focuses on housing, economic development and management consulting projects. Prior to joining Springsted, Mr. Rapp worked for over twenty -five years as a senior executive in both the public and private sectors, holding the positions of City Manager in three cities, Community Development Director of the Metropolitan Council of the Twin Cities, Managing Principal of a planning and urban design firm and President of his own consulting firm. His considerable background in development includes service as Executive Director of an HRA and as City Manager of communities experiencing both high growth and significant redevelopment, including downtown revitalization. While in the private sector, Mr. Rapp assisted clients in creating high quality projects and livable communities. He was directly responsible for bringing several large master - planned and new urbanist developments through the approval process, working directly with developers, city councils and development authorities. During his tenure at the Metropolitan Council, Mr. Rapp directed the implementation of the Metropolitan Livable Communities Act — landmark legislation that created a region -wide response to the issues of polluted land cleanup, affordable housing and innovative development. In addition, Mr. Rapp oversaw development of Metro 2040, the Twin Cities' first new growth management plan to incorporate the principles of smart growth and address the costs of growth. Mr. Rapp also has extensive experience as a facilitator and trainer. He has worked with cities of all sizes conducting goal- setting retreats and working with community groups. He was responsible for facilitating the land use and station area planning process for the Hiawatha Light Rail Transit Line — the first LRT line in the Twin Cities — which involved dozens of neighborhood groups and government oversight committees. In addition, he developed a training course for public officials dealing with difficult political environments that he has presented throughout the United States. Education Minnesota State University, Mankato, Minnesota Master of Arts in Public Administration University of Minnesota, Duluth, Minnesota Bachelor of Arts in Urban Studies Professional Sensible Land Use Coalition — President Association of Metropolitan Municipalities — Past President Metropolitan Area Management Association — Past President North Hennepin Community College Advisory Board — Past President League of Minnesota Cities — former Board Member Urban Land Institute — former Minnesota Executive Board Member Minnesota City- County Management Association International City- County Management Association — Full Member Adjunct Faculty, Hamline University WS -3 WORK SESSION STAFF REPORT Work Session Item No. 3 Date: Council Work Session, Wednesday, June 22, 2005 To: Mayor and City Council From: Mary Divine Re: YMCA Financing, Springsted, Inc. At the Council meeting of June 27, 2005, Agenda Item 6C calls for the City Council to consider calling for a public hearing for the establish of Tax Abatement in the Legacy at Woods Edge project area, and providing a business subsidy for the YMCA through tax abatement. The actual public hearing will take place on Monday, July 25, 2005. Springsted, Inc., the city's financial consultants, will be here to discuss the mechanics of the use of tax abatement for the YMCA. Attached you will find a memo from Terri Heaton of Springsted, debt schedules for both 15 and 20 year abatements, and a calendar of the Tax Abatement process. June 20, 2005 Mayor John Bergeson and City Council Mr. Gordon Heitke, City Administrator 600 Town Center Parkway Lino Lakes, MN 55014 -1182 RE: LINO LAKES YMCA PROJECT FINANCING Background and History The City of Lino Lakes has made commitments to the YMCA in order to assist in constructing a new recreational facility. This commitment includes $1.5 million in project financing and approximately $500,000 in and donation. In an earlier report presented by Springsted to the City in March and July 1999, the commitment was suggested to be fulfilled by having the City donate the land, fund the infrastructure improvements from the utility fund, provide cash of $500,000 from funds on hand as well as $1,000,000 lease revenue bond issued through the EDA to provide a $1,500,000 total cash contribution. The lease revenue bonds would be repaid from a tax levy against all property in the City. It was anticipated that the required tax levy, an average of $93,000 per year, would not substantially increase individual property taxes as the consistent growth in the City would offset the need to increase the tax rate to fund this additional levy amount. The principle reason to limit the size of this issue was to preserve the City's net debt limit equal to 2% of market value. If the issue increased to a level above $1 million, the entire issue would count against that limit. If the bond issue is $1 million or less, it would not count against the limit. Current Situation The expected shared participation for the $7,500,000 YMCA project is as follows: Cash from YMCA $3,000,000 To be financed by YMCA $2,500,000 City portion to be financed $1,500,000 Land donated by City $ 500,000 Total $7,500,000 City of Lino Lakes YMCA Financing Options June 22, 2005, page 2 We have been asked to recommend options for financing the City's $1,500,000 share of the facility and to discuss options and considerations related to the $2,500,000 to be financed by the YMCA. Financing the City's Portion of the Facility The City has committed to share in the project by financing $1,500,000 of the project cost. In order to obtain the authority to bond, there are three viable options the City may consider: 1) Referendum General Obligation (GO) Backed Bonds a. The City could ask the voters to approve the sale of bonds, however, the City has already committed to the $1,500,000 payment. The City is financing only 20% of the total project cost and, in return, will have a recreation facility to serve the community. A referendum is expensive, time consuming and unnecessary as there is already authority for the City to carry out its commitment (as noted in the other options presented herein). Referendum bonds would be subject to debt limits but would allow the City to obtain GO backing and lower interest rates as a result. 2) Lease Revenue Bonds issue by the City a. In our report written in 1999, we recommended Lease Revenue Bonds for up to $1,000,000 to avoid inclusion in debt limit calculations with the remaining $500,000 paid from cash. If the City is able to reduce debt by using cash on hand the bond issue may be outside of debt limits. If not, the City's debt as a percentage of market value would grow from .86% to about .95 %. This is well below the 2% State cap. Lease Revenue Bonds would also result in higher interest rates as the bonds would be Lease Bonds without GO backing. While this tool is a viable option, the ability to issue abatement bonds (see item 3 below) for community centers has evolved since we last studied the financing for this project and may be a more appropriate fit to the City's needs. 3) Abatement Bonds a. The City has used abatement for public improvements in the past. This tool allows the City to issue GO Abatement Bonds repaid from a special tax levy outside of levy limits (should they be reinstated). Authority for the abatement is obtained by identifying properties that benefit from the public improvement to be financed. If the City's share of annual taxes generated by these properties equals or exceeds the annual debt service, an abatement may be created by resolution. City of Lino Lakes YMCA Financing Options June 22, 2005, page 3 The City may ask the County or School to abate their share of taxes if the planned expenditure also benefits these entities. There is a 20 year limit if at least one other entity declines the City's request to participate. If all three entities participate, or if the City participates alone without requesting participation from other taxing jurisdictions, the time limit is 15 years. The abatement may be phased in with the Village project so that the levy is offset by added tax base. The maximum abatement cannot exceed 10% of the City's levy (not including debt levy). The City has sufficient capacity under this authority. GO abatement bonds do not count against the City's debt limit and will allow the City to obtain lower interest rates. The abatement could last 15 years with an average annual levy of $155,000 or last 20 years with an average annual levy of $130,000. Since there is sufficient property growth projected to absorb the additional costs, we are recommending that the City use a 15 year time frame to repay the bonds in order to maintain financial flexibility in the future. Under separate cover, Steve Bubul, Kennedy & Graven, has opined that the abatement tool to finance the City's share of the YMCA is an appropriate use and meets the legal requirements necessary to allow creation of the abatement. From a financial standpoint, Springsted believes that abatement bonds are most advantageous for this portion of the transaction in that (1) it produces the lowest interest rate possible (2) it is a simple transaction compared to a lease transaction (3) the abatement levy is offset by growth anticipated in the Village project and (4) the authority for an abatement for this project already exists in State law. Assisting the YMCA with Financing their Share of the Facility We have also been asked to consider ways that the City could assist in financing the YMCA's portion of $2,500,000. There are good reasons for the City to consider such assistance, especially where it allows some control or protection of the City's initial investment. We have looked at two options. 1) Lease Revenue Bonds a. Lease Revenue Bonds could be issued by the City and repaid by a lease payment from the YMCA to cover 100% of the debt. The interest rate would be 20 to 30 basis points higher than a GO backed bond and a debt service reserve City of Lino Lakes YMCA Financing Options June 22, 2005, page 4 would be required. In the case of a default, the City would be expected to levy for the remaining outstanding bonds, but is not obligated to do so. If the City assumes responsibility for the payments, the City would then own the facility and the land. A default would impact the City's bond rating. The YMCA is providing $3,000,000 of funding upfront which lessens the likelihood of default. While this option protects the City's initial investment, it also requires the City to issue bonds to cover more than just their commitment. 2) Tax Exempt Private Debt a. Bonds would be issued by the City and repaid solely from loan payments pledged by the YMCA. There would be no obligation to the City legally or implied as long as due diligence was met prior to issuing the bonds. The interest rate would be 20 to 30 basis points higher than a GO backed bond and a debt service reserve would be required. The documents may be structured to allow the City first right of refusal in the case of default, but that would require agreement by the YMCA, trustee and bondholders. The City may choose to issue bonds to pay off conduit debt if it decided to own and operate the facility. The bond documents would provide for this. Any default by the YMCA would not impact the City's credit rating. The YMCA has a strong credit history and the likelihood of default is remote. The YMCA's financial statements for this project would be made public. Both options for the $2.500,000 YMCA financed share provide tax exempt financing which provides cost savings to the City's partner, the YMCA. While there are benefits to both options, the most appropriate tool depends on whether the City would like to issue direct debt to finance the YMCA's share of debt to insure their ability to control the facility if the YMCA defaults, or if the City would like to issue conduit debt and then decide whether to be responsible for the $2,500,000 share, should a default occur. We recommend pursuing the Tax Exempt Private Debt option (conduit debt) because it eliminates any risk to the City's credit rating. Bond Counsel is comfortable issuing GO Abatement Bond to finance the same facility that is being privately financed. We condition this recommendation on the bondholder agreeing to grant the City a right of first refusal to protect the City's investment. The YMCA is currently in discussions with banks and has asked the City to commit to issuing less than $10 million of bonds in 2005 so that the Tax Exempt Private Debt City of Lino Lakes YMCA Financing Options June 22, 2005, page 5 would be bank qualified (offering certain tax advantages to the banks that would purchase the bonds). Should the Tax Exempt Private Debt option not be possible with the City's right of first refusal, we would recommend that the City then consider Lease Revenue Bonds. Recommendation We recommend that the City issue $1.5 million of abatement bonds to finance the City's commitment and $2.5 million of Tax Exempt Private Debt (conduit debt) in order to provide tax exempt financing to the YMCA, without issuing direct debt while protecting the $1.5 million of abatement bonds through a right of first refusal provision. Attached please find schedules showing the debt service for a $1,500,000 GO Abatement Bond over a 15 year and 20 year collection period. While the 15 year timeframe allows a quicker payoff, it also increases the annual debt service by about $25,000 each of the fifteen years with savings resulting in years 16 though 20. The abatement properties identified are sufficient to offset the additional levy at 15 years and so we are recommending the 15 year bonds. We have not estimated any impact for the YMCA's bond options because it is assumed that there will not be any levy for those bonds. We are available to further discuss these options further at your convenience. Sincerely, Terri Heaton Senior Vice President Attachments Cc: Mr. Alan Rolek, Finance Director Mr. Michael Grochala, Community Development Director Ms. Mary Divine, Economic Development Specialist Mr. Steve Bubul, Kennedy & Graven $1,630,000 City of Lino Lakes, Minnesota General Obligation Tax Abatement Bonds Series 2005 - 15 Year Term Sources & Uses Dated 10/01120051 Delivered 10/01/2005 Sources Of Funds Par Amount of Bonds $1,630,000.00 Total Sources $1,630,000.00 Uses Of Funds Deposit to Project Construction Fund 1,500,000.00 Deposit to Capitalized Interest (CIF) Fund 84,250.00 Costs of Issuance 25,700.00 Total Underwriter's Discount (1.100 %) 17,930.00 Rounding Amount 2,120.00 Total Uses $1,630,000.00 s,,rie, 2006 Tel. A. 1(177 477 l SINGLE PrRI )SE I G,- 772005 ; 7:93R14 $1,630,000 City of Lino Lakes, Minnesota General Obligation Tax Abatement Bonds Series 2005 - 15 Year Term NET DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P +I CIF Net New D/5 105 %Overlevy 02/0112006 - 02/01/2007 84,250.00 84,250.00 (84,250.00) - 02/01/2008 85,000.00 3.000% 63,187.50 148,187.50 - 148,187.50 155,596.88 02/01/2009 85,000.00 3.150% 60,637.50 145,637.50 145,637.50 152,919.38 02/01/2010 90,000.00 3.250% 57,960.00 147,960.00 147,960.00 155,358.00 02/01/2011 90,000.00 3.400% 55,035.00 145,035.00 145,035.00 152,286.75 02/01/2012 95,000.00 3.550% 51,975.00 146,975.00 146,975.00 154,323.75 02/01/2013 100,000.00 3.650% 48,602.50 148,602.50 148,602.50 156,032.63 02/01/2014 105,000.00 3.750% 44,952.50 149,952.50 149,952.50 157,450.13 02/01/2015 105,000.00 3.850% 41,015.00 146,015.00 146,015.00 153,315.75 02/01/2016 110,000.00 4.000% 36,972.50 146,972.50 146,972.50 154,321.13 02/01/2017 115,000.00 4.050% 32,572.50 147,572.50 - 147,572.50 154,951.13 02/01/2018 120,000.00 4.150% 27,915.00 147,915.00 147,915.00 155.310.75 02/01/2019 125,000.00 4.250% 22,935.00 147,935.00 147,935.00 155,331.75 02/01/2020 130,000.00 4.300% 17,622.50 147,622.50 - 147,622.50 155,003.63 02/01/2021 135,000.00 4.350% 12,032.50 147,032.50 - 147,032.50 154,384.13 02/01/2022 140,000.00 4.400% 6,160.00 146,160.00 146,160.00 153,468.00 Total $1,630,000.00 - $663,825.00 $2,293,825.00 (84,250.00) $2,209,575.00 $2,320,053.75 SIGNIFICANT DATES Dated Date 10/01/2005 Delivery Date 10/01/2005 First Coupon Date 8/01/2006 Yield Statistics Bond Year Dollars $16,348.33 Average Life 10.030 Years Average Coupon 4.0605057% Net Interest Cost (NIC) 4.1701804% True Interest Cost (TIC) 4.1726700% Bond Yield for Arbitrage Purposes 4.0338541 % All Inclusive Cost (AIC) 4.3753730% IRS Form 8038 Net Interest Cost 4.0605057% Weighted Average Maturity 10.030 Years 1 balm crt i SIN;LL'PURPOSE / b':/77 200 / 7:43 PM $1,640,000 City of Lino Lakes, Minnesota General Obligation Tax Abatement Bonds Series 2005 - 20 Year Term Sources & Uses Dated 10/01/2005 ( Delivered 10/01/2005 41 rifts Sources Of Funds Par Amount of Bonds $1,640,000.00 Total Sources $1,640,000.00 Uses Of Funds Deposit to Project Construction Fund 1,500,000.00 Deposit to Capitalized Interest (CIF) Fund 89,733.33 Costs of Issuance 25,700.00 Total Underwriter's Discount (1.300 %) 21,320.00 Rounding Amount 3,246.67 Total Uses $1,640.000.00 2006 Tux Abatement j .tINitLEPt MUSE / e::77:-2V5 ,•' 1:431'.19 $1,640,000 City of Lino Lakes, Minnesota General Obligation Tax Abatement Bonds Series 2005 - 20 Year Term NET DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P +I CIF Net New DIS 105% Overlevy 02/01/2006 - - - 02/01/2007 - - 89,733.33 89,733.33 (89,733.33) - 02/01/2008 55,000.00 3.000% 67,300.00 122,300.00 122,300.00 128,415.00 02/01/2009 60,000.00 3.150% 65,650.00 125,650.00 125,650.00 131,932.50 02/01/2010 60,000.00 3.250% 63,760.00 123,760.00 123,760.00 129,948.00 02/01/2011 60,000.00 3.400% 61,810.00 121,810.00 121,810.00 127,900.50 02/01/2012 65,000.00 3.550% 59,770.00 124,770.00 124,770.00 131,008.50 02/01/2013 65,000.00 3.650% 57,462.50 122,462.50 122,462.50 128,585.63 02/01/2014 70,000.00 3.750% 55,090.00 125,090.00 125,090.00 131,344.50 02/01/2015 70,000.00 3.850% 52,465.00 122,465.00 122,465.00 128,588.25 02/01/2016 75,000.00 4.000% 49,770.00 124,770.00 - 124,770.00 131,008.50 02/01/2017 75,000.00 4.050% 46,770.00 121,770.00 121,770.00 127,858.50 02/01/2018 80,000.00 4.150% 43,732.50 123,732.50 123,732.50 129,919.13 02/01/2019 85,000.00 4.250% 40,412.50 125,412.50 125,412.50 131,683.13 02/01/2020 85,000.00 4.300% 36,800.00 121,800.00 121,800.00 127,890.00 02/01/2021 90,000.00 4.350% 33,145.00 123,145.00 123,145.00 129,302.25 02/01/2022 95,000.00 4.400% 29,230.00 124,230.00 124,230.00 130,441.50 02/01/2023 100,000.00 4.450% 25,050.00 125,050.00 125,050.00 131,302.50 02/01/2024 105,000.00 4.500% 20,600.00 125,600.00 125,600.00 131,880.00 02/01/2025 110,000.00 4.550% 15,875.00 125,875.00 125,875.00 132,168.75 02/01/2026 115,000.00 4.600% 10,870.00 125,870.00 125,870.00 132,163.50 02/01/2027 120,000.00 4.650% 5,580.00 125.580.00 125,580.00 131,859.00 Total $1,640,000.00 - $930,875.83 $2,570,875.83 (89,733.33) $2,481,142.50 $2,605,199.63 SIGNIFICANT DATES Dated Date 10/01/2005 Delivery Date 10/01/2005 First Coupon Date 8/01/2006 Yield Statistics Bond Year Dollars $21,611.67 Average Life 13.178 Years Average Coupon 4.3072839% Net Interest Cost (NIC) 4.4059343% True Interest Cost (TIC) 4.4075958% Bond Yield for Arbitrage Purposes 4.2719019% All Inclusive Cost (AIC) 4.5745691% IRS Form 8038 Net Interest Cost 4.3072839% Weighted Average Maturity 13.178 Years Series 2006 Tax Alvlrmew SINGLE PURPOSE / 6;77/1005 / 1:4,4 Fd9 City of Lino Lakes, Minnesota Tax Abatement Process (YMCA Project) Time Schedule — Updated Wednesday, June 22, 2005 Monday, June 27, 2005 July 2005 Tuesday, July 5, 5 pm Tuesday, July 12 Deadline: July 5 Monday, July 25, 6:30 pm City Council Worksession • Discussion Item #1 • Discussion Item #2 • Discussion Item #3 City Council Meeting • Action Item #1 • Action Item #2 Financing options available to City for YMCA Project Tax Abatement Overview The Process of Establishing a Tax Abatement for YMCA Project Authorize Implementation of Time Schedule and Call for Public Hearing on Establishment of a Tax Abatement Authorize Staff to Draft Tax Abatement Resolution • Discussion Item #1 Discuss Abatement Participation from School District and County City Council Worksession - optional • Discussion Item #1 Followup Overview of Tax Abatement Concept for YMCA project and Estimated Amount of Revenue • Discussion Item #2 Review Draft Tax Abatement Resolution — will be distributed Deadline for Submitting Information for Publication of Notice of Public Hearing (arrangements made by SPRINGSTED) Publication of Notice of Public Hearing White Bear Lake Quad Community Press (arrangements made by SPRINGSTED) City Council Holds Public Hearing, and Adopts Necessary Resolution • Public Hearing #1 To Establish a Tax Abatement • Action Item #1 Approve Resolution Establishing a Tax Abatement Prepared by Springsted, Inc. 6/17/2005 WS - 4 WORK SESSION STAFF REPORT Work Session Item No. 4 Date: Council Work Session, Wednesday, June 22, 2005 To: City Council From: Gordon Heitke, City Administrator Re: VLAWMO Reorganization Background As previously discussed, members of the VLAWMO board and member communities have been discussing the best way to continue providing water resource management services in the future. Due to the small area and limited funding of VLAWMO, it has been proposed that VLAWMO either be incorporated into an existing watershed district(s), or the annual operating budget and member assessments be substantially increased. Lino Lakes' VLAWMO representative, Jeff McDowell, will be present to update the Council with the most recent information and his perspective on this issue. The 2006 budget and cost allocation to member units is attached and information is being gathered to respond to the question of tax impact on property owners. Requested Council Direction Staff is requesting that the City Council provide direction as to whether a resolution is to be prepared for: 1) Continuing the VLAWMO joint powers agreement, or 1 2) Ending the joint powers agreement and combining the VLAWMO service area into the Attachments 1. 2006 VLAWMO budget, adopted June 9, 2005 2. 2006 member unit assessments 2 Vadnais Lake Area Watershed Management Organization 2006 Budget Aproved by Board on June 9, 2005 Task Itemized Cost Task Cost 1 Monitoring and Assessment 1.a Citizen's Lake Monitoring $1,500 1.b Ramsey Co lab work & bio assessn $8,500 1.c Subtotal Lambert Cr. Data collection $15,000 $25,000 2 Outside professional consultants 2.a Engineering (3 hr /mo @ $125) $50,000 2.b Technical /scientist $10,000 2.c Public Education $6,000 2.d Legal $1,500 2.e Financial audit $3,500 2.f Bookkeeping / office $500 subtotal $71,500 $71,500 3.a Information systems Website maintenance $5,000 3.b website /Computer upgrades 4 Office rent, copies, post, tel $15,000 5 Insurance $3,200' 6.a Maintenance Lambert Lake (3 hr /mo @$50) $1,800 , 6.b Grass & Rice Lks (1 hr /mo) $700 6.c Whitaker weir & pond $5,000 sub total $7,500 $7,500 7.a Administration Administrator $60,000 7.b summer intern $10,000 7.c Water resources tech $45,000 subtotal $115,000 $115,000 8 Training (staff /Board) $1,400 9 Misc. & Cont. $16,200 Projects $0 10 Water Plan project $75,000 11.a Source Water protection Wellhead protection assistance 11.b Well sealing program $10,000 $344,800 * With 9 legal holidays @ 8 hours /day & 2 wks vacation INCOME 2006 12 Fees for review service $2,000 13 Interest $500 14 Miscellanous WCA sub grant & other $3,500 15 Assessments $338,800 16 Transfer from savings $0 $344,800 Vadnais Lake Area WMO 2006 Requested Assessments Based on VLAWMO Budget Approved June 9, 2005 Assessment Gem Lake 2.85 $338,800 $9,656 Lino Lakes 3.05 $338,800 $10,333 North Oaks 29.32 $338,800 $99,336 St Paul Reg Water 3.4 $338,800 $11,519 Vadnais Heights 27.42 $338,800 $92,899 White Bear Lake 22.53 $338,800 $76,332 White Bear Twn 11.43 $338,800 $38,725 100 $338,800