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31 <br />Mike Morrison <br />2008 Road Reconstruction Bonds <br />Page 2 <br />March 11, 2008 <br />Analysis of Issues: <br />1. Can the City assess benefiting property owners for the project? <br />No. Since the Silver Lake Road is a County State Aid Road, the City does not have the <br />ability to assess benefiting property owners for a portion of the project, as is typical with the <br />City's on-going road reconstruction program. <br />2. What is the proposed financing mechanism for the remaining project costs? <br />We are proposing that the City utilize its authority to issue General Obligation Sheet <br />Reconstruction Bonds to finance the entire remaining balance of the project, in which the <br />amount financed will be paid 100% by a general tax levy. This authority was granted to <br />Cities in 2002 and it generally exempts city bonds issued under a street reconstruction <br />program from the referendum requirements usually required for bonding expenditures <br />(referendum generally required if 20% of the project is not/cannot be assessed). <br />3. How does this type of financing differ from the City's typical way of financing street <br />reconstruction projects? <br />In order to utilize this type of financing, the City has to prepare a 5 -Year Street <br />Reconstruction Plan (SRP) which is presented at a public hearing to solicit comment and <br />feedback from the community (this isn't required for 429 improvement bonds and is an extra <br />step in the typical bonding process). Upon conclusion of the public hearing, the Council must <br />approve the SRP via a unanimous vote. <br />Although a referendum is not required, a reverse referendum is allowable. If a petition <br />bearing the signatures of at least 5 percent of the votes cast in the last general election <br />requesting a vote on the issuance of the bonds is received by the municipal clerk within 30 <br />days after the public hearing, a referendum vote on the issuance of the bonds shall be called <br />(if a vote is taken and the referendum passes, the taxes would be levied on market value rather <br />than tax capacity). <br />In addition, these bonds are restricted by the amount of net debt the city can issue. A city <br />cannot issue debt in excess of 2% of the assessor's taxable market value for the city. For St. <br />Anthony, the 2008 TMV is $893,542,800. Therefore, the total amount of outstanding debt <br />cannot exceed $17,870,856. As of March 11, 2008 the City had only $4,755,000 subject to <br />the legal debt limit (over $13 million in capacity available). <br />Mike Morrison <br />