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h EHLERS 10 r=="- LEADERS IN PUBLIC FINANCE OTo: Mike Morrison — City Manager C From: Stacie Kvilvang & Jonathan North — Ehlers W Date: February 23, 2010 5 Subject: 2010 Road Reconstruction Bonds Overview Annually the City issues 429 General Obligation assessment bonds to complete the planned road reconstruction project. Under the 429 process the City must assess a minimum of 20% of the project costs to benefitting property owners, which typically is not an issue. For the 2010 road reconstruction improvements to Silver Lane, the City is unable to meet the minimum assessment threshold and therefore will need to finance the project through the Street Reconstruction Bond process instead. Primary Issues to Consider: 1. Why can't the City meet the 20% assessment test? 2. What is the proposed financing mechanism for the project? 3. How does this type of financing differ from the City's typical way of financing street reconstruction projects? 4. What is the timeline/process for the issuance of the bonds? Analysis of Issues: 1. Why can't the City meet the 20% assessment test? The City is unable to meet the 20% threshold since many of the improvement are outside of the assessable area. However, the City will be assessing approximately $110,000 to benefiting property owners at a rate of 1.5% above True Interest Costs (TIC) of the bonds (standard practice). 2. What is the proposed financing mechanism for the project? We are proposing that the City utilize its authority to issue General Obligation Street Reconstruction Bonds to finance the project. Similar to the 429 Bonds, the portion of the project not being paid by assessments will be paid by a general tax levy. This authority was granted to Cities in 2002 and it generally exempts city bonds issued under a street LEADERS IN PUBLIC FINANCE 3o6o Centre Pointe Drive Phone:65i-697-85o6 Fax: 65i -697-855S Roseville, MN 55ii3-iio5 skviIva ngQe ehlers-inc.com