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20 Mike Mornson 2008 Road Reconstruction Bonds Page 2 April 8, 2008 Cities in 2002 and it generally exempts city bonds issued ander a street reconstruction program from the referendum requirements usually required for bonding expenditures (referendum generally required if 20% of the project is not/cannot be assessed). The City is required to hold a public hearing on its intent to issue these bonds and its 5 -year Street Reconstruction Plan (attached). The City typically levy's $145,000 each year for its annual road reconstruction program. The annual levy for this years road reconstruction project will be approximately $175,000 or $30,000 more than the average the City typically levy's. It should be noted that there is no impact to taxpayers for this increased levy amount since the City paid off three (3) bond issues earlier this year, which freed up $87,000 in levy capacity. 3. How does this type of financing differ from the City's typical way of financing street reconstruction projects? In order to utilize this type of financing, the City has to prepare a 5 -Year Street Reconstruction Plan (SRP) which is presented at a public hearing to solicit comment and feedback from the community (this isn't required for 429 improvement bonds and is an extra step in the typical bonding process). Upon conclusion of the public hearing, the Council must approve the SRP via a unanimous vote. Although a referendum is not required, a reverse referendum is allowable. If a petition bearing the signatures of at least 5 percent of the votes cast in the last general election requesting a vote on the issuance of the bonds is received by the municipal clerk within 30 days after the public hearing, a referendum vote on the issuance of the bonds shall be called (if a vote is taken and the referendum passes, the taxes would be levied on market value rather than tax capacity). In addition, these bonds are restricted by the amount of net debt the city can issue. A city cannot issue debt in excess of 2% of the assessor's taxable market value for the city. For St. Anthony, the 2008 TMV is $893,542,800. Therefore, the total amount of outstanding debt cannot exceed $17,870,856. As of April 8, 2008 the City had only $4,755,000 subject to the legal debt limit (over $13 million in capacity available).