2020.07.06 CC Packet - Laserfiche WebLink

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2020-2024 Capital Improvement Plan Page 2 1. Introduction A Capital Improvement Plan (CIP) is a document designed to anticipate future capital improvement expenditures so that they may be purchased in the most efficient and cost effective method possible. The City of Hugo, Minnesota (the "City") believes the capital improvement process is an important element of responsible fiscal management. Major capital expenditures can be anticipated and coordinated so as to minimize potentially adverse financial impacts caused by the timing and magnitude of capital outlays. This coordination of capital expenditures is important to the City in achieving its goals of adequate physical public assets, preservation of public assets and sound fiscal management. 2. Purpose In 2003, Minnesota Statutes 475.521 was created to allow cities to issue bonds for certain public facilities without requiring a referendum of the electorate. The statute also gave cities the authority to provide a general obligation pledge to the repayment of the bonds Minnesota Statutes 475.521 defines capital expenditures as "the acquisition or betterment to public lands, buildings, or other improvements used as a city hall, town hall, library, public safety, or public works facility," with a useful life of five or more years. For the purposes of M.S. 475.521, capital improvements do not include "light rail transit or related activities, parks, roads/bridges, administrative buildings other than city or town hall, or land for those facilities." The purpose of this document is to satisfy the requirements in M.S. 475.521 and issue bonds for the purpose described in Sections 4 and 5. 3. Capital Improvement Planning Process The City Council authorizes the preparation of the Capital Improvement Plan (CIP). City staff is instructed to assemble the capital expenditures to be undertaken within the next five years. The City Council then reviews the expenditures according to their priority, fiscal impact, and available funding. From this information, a preliminary capital improvement plan is prepared. The City Council then prepares a plan based on the available funding sources. If bonding is necessary, the City works with its financial advisor to prepare a bond sale and repayment schedule. In subsequent years, the process is repeated as expenditures are completed and as new needs arise. For a municipality to use its authority to finance expenditures under M.S. 475.521, it must meet the requirements outlined in the statutes. Specifically, the governing body must approve the sale of capital improvement bonds by a 3/5ths majority of its membership. In addition, the City must hold a public hearing for public input. Notice of such hearing must be published in the official newspaper of the municipality at least 14, but not more than 28 days prior to the date of the public hearing. The governing body approves the CIP following the public hearing. 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 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.