HomeMy WebLinkAbout2010.06.07 RESO 2010-0022EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY OF HUGO, MINNESOTA
HELD: June 7, 2010
Pursuant to due call and notice thereof, a regular or special meeting of the City Council of
the City of Hugo, Minnesota, was duly called and held at the City Hall in Hugo, Minnesota on June
7, 2010, at 7:00 p.m. for the purpose, in part, of giving preliminary approval to the issuance of
general obligation capital improvement plan bonds and amending the capital improvement plan.
The following members were present: Haas, Klein, Petryk, Weidt and Miron.
and the following were absent: None.
Member Haas introduced the following resolution and moved its adoption:
RESOLUTION NO. 2010 - 22
RESOLUTION GIVING PRELIMINARY APPROVAL FOR THE ISSUANCE OF GENERAL
OBLIGATION CAPITAL IMPROVEMENT PLAN BONDS IN AN AMOUNT NOT TO
EXCEED $1,450,000 AND AMENDING THE CITY OF HUGO MINNESOTA, CAPITAL
IMPROVEMENT PLAN THEREFOR
A. WHEREAS, the City Council of the City of Hugo, Minnesota (the "City") proposes
to issue its general obligation capital improvement plan bonds (the "Bonds") and amend the City of
Hugo, Minnesota, Capital Improvement Plan (the "Plan"); and
B. WHEREAS, the City has caused notice of the public hearing on the intention to
issue the Bonds and on the proposed adoption of the Plan amendment to be published pursuant to
and in accordance with Minnesota Statutes, Section 475.521; and
C. WHEREAS, a public hearing on the intention to issue the Bonds and on the
proposed Plan amendment has been held on this date, following published notice of the public
hearing as required by law; and
D. WHEREAS, in approving the Plan, the City Council considered for the acquisition
of the Public Safety and City Hall projects and for the overall Plan:
1. The condition of the City's existing infrastructure, including the projected
need for repair and replacement;
2. The likely demand for the improvement;
3. The estimated cost of the improvement;
4. The available public resources;
5. The level of overlapping debt in the City;
6. The relative benefits and costs of alternative uses of the funds;
7. Operating costs of the proposed improvements; and
8. Alternatives for providing services more efficiently through shared facilities
with other local governmental units; and
E. WHEREAS, the City Council has determined that the issuance of general obligation
capital improvement plan bonds in the aggregate principal amount of $1,450,000 is the best way to
finance those portions of Plan eligible under Minnesota Statutes, Section 475.521.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Hugo,
Minnesota, that the City hereby adopts the Capital Improvement Plan amendment and authorizes
the issuance of up to $1,450,000 aggregate principal amount of general obligation capital
improvement plan bonds.
The motion for the adoption of the foregoing resolution was duly seconded by Member
Weidt and, after full discussion thereof and upon a vote being taken thereon, the following voted in
favor thereof. Haas, Weidt, Klein, Petryk and Miron.
and the following voted against the same: None.
Whereupon the resolution was declared duly passed and adopted.
[Bonds must be approved by at least a three-fifths vote of the membership.]
[Issuance of Bonds is subject to a 30 -day reverse referendum after the public hearing.]
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CAPITAL IMPROVEMENT
PLAN AMENDMENT
(BOND PLEMENT)
To Be Adopted June 7, 2010
City of Hugo, MN
Capital Improvement Plan Amendment
Statutory Authority and Requirements
Minnesota Statutes Chapter 475-521 authorizes a Minnesota City to adopt a capital improvement
plan ("Plan"). The Plan must cover at least a five-year period and set forth the estimated schedule,
timing, cost, payment revenue source(s) and other information for each improvement included in the
Plan. The Plan must be approved by the City Council after a public hearing.
A City may issue general obligation bonds for certain improvements included in an approved Plan if
the following conditions are satisfied:
1. The City must publish notice of and conduct a public hearing on the issuance of
the bonds. The bonds are subject to referendum voter approval only if a petition
requesting a vote signed by five percent of the votes cast in the last general
election is received within 30 days of the hearing.
2. The maximum annual debt service payment on all outstanding CIP bonds does
not exceed 0.16 percent of the taxable market value of the City.
3. The issuance of bonds must be approved by at least three-fifths of the members
of the City Council.
Capital improvements to be financed with capital improvement bonds may include land acquisition
and building construction or improvements for the purpose of a city hall, library, public safety
facility and public works facility. Excluded improvements include light rail transit facilities, parks,
roads, bridges or land for those types of facilities.
History and Existing CIP Bonds
The City of Hugo previously adopted a capital improvement plan under authority of Minnesota
Statutes Chapter 475.521. In 2004 the City of Hugo issued its $2,560,000 General Obligation
Capital Improvement Bonds, Series 2004A. The proceeds of that issue were used to construct a
public works facility. At the time of the drafting of this amendment to the Plan, the City has
outstanding CIP Bonds of $1,840,000. The maximum annual debt service of these outstanding CIP
bonds is $227,118.
In 1998 the City of Hugo Economic Development Authority ("EDA") issued its $1,165,000 Public
Project Revenue Bonds, Series 1998. The proceeds of that issue were used to construct a Public
Safety Facility within the corporate boundaries of the city. The City of Hugo ("City") currently
leases that facility from the EDA. The City intends to formally acquire ownership of the Public
Safety Facility via the issuance of new Capital Improvement Plan bonds.
In 2001 the City of Hugo EDA issued its $1,870,000 Public Facility Lease Revenue Bonds, Series
2001. The proceeds of that issue were used to construct a City Hall Facility within the corporate
boundaries of the city. The City currently leases that facility from the EDA. The City intends to
formally acquire ownership of the City Hall Facility via the issuance of new Capital Improvement
Plan bonds.
City Debt and Overlapping Debt
In preparing this Capital Improvement Plan amendment, the City has considered for each project,
and the plan as a whole, several factors, including the level of overlapping debt of the City.
Included as a part of the complete capital improvement plan, the City has evaluated all of its
existing debt, including the repayment sources utilized for all existing debt.
Debt Service Limit & New Bond Authority
The maximum amount which can be levied on all of the City's CIP bonds is limited by the
following formula:
Payable 2010 Taxable Market Value $1,411,069,200
Times .16% .0016
CIP legal lending limit $ 2.257.711
Less existing CIP Bond P&I (maximum) (227,118)
Amount available for P&I on new CIP Bonds $ 2.030.593
The City presently proposes to issue up to $1,450,000 in G.O. Capital Improvement Plan bonds.
Assuming these bonds are paid over approximately 8 years at current market interest rates, the
maximum combined annual principal and interest payment for this issue is estimated to be
$242,370. Please review Exhibit 1 for a breakdown of estimated payments. When combined with
the existing CIP maximum principal and interest payment, this is below the statutory limit.
The City reserves the right to vary the term of any borrowing identified in this plan with the
understanding that the maximum payment of all outstanding CIP Bonds cannot exceed the statutory
limit.
Net Debt Limits
In addition to the limitations above, in the case of a municipality with a population of 2,500 or
more, the bonds are subject to the net debt limits under section 475.53. Minnesota Statutes Chapter
475.53, Subd. 1, states that no municipality, except a school district or a city of the first class, shall
incur or be subject to a net debt in excess of three percent of the market value of taxable property in
the municipality. At the time of the drafting of this Plan Amendment, the City has the following net
debt capacity:
Payable 2010 Taxable Market Value $1,411,069,200
Times 3% .03
Maximum Net Debt Limit $ 42.332,076
Outstanding Applicable Debt Less Funds on Hand (2,856,075)
Net Debt Limit Available Capacity $ 39.476.001
Proposed Capital Improvements
The City's Capital Improvement Plan is amended to include $1,450,000 for the purpose of acquiring
the Public Safety Facility and City Hall Facility that the City currently leases from the EDA. The
acquisition shall be financed via the City's issuance of General Obligation Capital Improvement
Plan bonds.
Detailed information on the projects, including a discussion of the eight factors which must be
considered by statute for each project, is found in the pages that follow:
2
• Project #1: Public Safety Facility
In 1998 the City of Hugo Economic Development Authority ("EDA") issued its $1,165,000 Public
Project Revenue Bonds, Series 1998. The proceeds of that issue were used to construct a Public
Safety Facility within the corporate boundaries of the city. The City of Hugo ("City") currently
leases that facility from the EDA. The City intends to formally acquire ownership of the Public
Safety Facility via the issuance of new Capital Improvement Plan bonds.
Statutory Factors considered:
#1: Condition of existing facilities and need for repair or replacement:
Condition of the (original) existing facilities and its improvement needs are described as
follows:
1. Prior to the new Public Safety Facility being constructed by the EDA in 1998,
the condition of the city's existing structure would have been described as poor.
Further, the facility contained insufficient space for storage of the City's
firefighting equipment and vehicles.
2. The original facility was located in an area of the city where the only access
points to main arterial roadways were at uncontrolled intersections.
3. The original site of the facility also included unheated vehicle bays, with offices
in an adjacent trailer that was also in poor condition.
#2: Demand and Need for the Project:
The need for this project is a result of the items listed above as well as the following:
1. The original structure did not contain enough bays to allow for the acquisition
and proper storing of additional firefighting vehicles and equipment.
2. To properly serve the community the City desired a facility that included a training
room, laundry facilities, and additional office and storage space.
#3: Estimated Cost
The initial cost to design, construct, and finance this project in 1998 was $1,165,000. As of the
time of the drafting of this plan amendment, the outstanding principal of the EDA's Public
Project Revenue Bonds, Series 1998 is $390,000. This amount, along with approximately
$15,000 in administrative and finance costs, represent the acquisition cost of the facility and is
to be financed through the issuance of G.O. Capital Improvement Plan bonds.
#4: Available Public Resources:
Acquisition costs will be funded with the proceeds of G.O. Capital Improvement Plan bonds.
The City will levy property taxes for bond payments.
M
Property
Funds on
Year
Tax
Bonding
Hand
Total
2010
$ -
$ 405,000
$ -
$ 405,000
2011
$ -
$ -
$ -
$ -
2012
$ -
$ -
$ -
$ -
2013
$ -
$ -
$ -
$ -
2014
$ -
$ -
$ -
$ -
M
• #5: Overlapping Debt in the City
See Exhibit 2.
#6: Project Priority & Relative Benefits vs. Cost
This is a high priority project. The fire department provides an essential core service function
of city government. Providing adequate physical space to operate and maintain equipment
efficiently and with a high level of service is deemed essential. The proper maintenance and
storage of equipment and vehicles is essential to this service.
#7: Operating Cost
The newly acquired facility has a larger square footage and will have a higher operating cost
than the original facility. However, to ensure the proper safety and well being of the City's
residents, the City has determined that cost to be minimal compared to the benefits of having a
sufficiently sized public safety facility that can properly store vehicles and equipment and
provide enough space for fire department personnel to adequately perform their duties.
#8: Other Alternatives Considered
The City has considered a number of options. However, by meeting the space needs of the fire
department in one properly sized and better located facility, the City is alleviating a potential
safety concern and achieving efficiency within the fire department's operations.
Project #2: City Hall Facility
In 2001 the City of Hugo EDA issued its $1,870,000 Public Facility Lease Revenue Bonds, Series
2001. The proceeds of that issue were used to construct a City Hall Facility within the corporate
boundaries of the city. The City currently leases that facility from the EDA. The City intends to
formally acquire ownership of the City Hall Facility via the issuance of new Capital Improvement
Plan bonds.
Statutory Factors considered:
#1: Condition of existing facilities and need for repair or replacement:
Condition of the (original) existing facilities and its improvement needs are described as
follows:
1. Prior to the new City Hall Facility being constructed by the EDA in 2001, the
condition of the City's existing structure would have been described as poor.
Further, the facility contained insufficient space for employees to effectively
perform their duties.
2. The original facility did not contain adequate space for the proper and secure
storage of supplies and records.
3. The original facility was in poor structural condition as evidenced by a leaking roof.
F11
#2: Demand and Need for the Project:
The need for this project is a result of the items listed above as well as the following:
The City determined the original structure was insufficient to service a
community of 7,000 people. The pace of growth in population and development
required a modern facility with adequate space for the City Council and other
public bodies to conduct official business.
2. Further, the City desired a facility that included public meeting rooms designed
to host civic and cultural events.
#3: Estimated Cost:
The initial cost to design, construct, and finance this project in 2001 was $1,870,000. As of the
time of the drafting of this plan amendment, the outstanding principal of the EDA's Public
Facility Lease Revenue Bonds, Series 2001 is $1,130,000. This amount represents the
acquisition cost of the facility and is to be financed through the City's issuance of G.O. Capital
Improvement Plan bonds (total not to exceed $1,045,000) and from funds held by the original
bond trustee in the amount of $85,000.
#4: Available Public Resources:
Acquisition costs will be funded with the proceeds of G.O. Capital Improvement Plan bonds.
The City will levy property taxes for bond payments.
#5: Overlapping Debt in the City
See Exhibit 2.
#6: Project Priority & Relative Benefits vs. Cost
This is a high priority project. Essential core service functions of city government are provided
at City Hall. Adequate physical space to efficiently provide a high level of service is deemed
essential. The proper maintenance and storage of documents is also essential to this service.
#7: Operating Cost
The newly acquired facility has a larger square footage and will have a higher operating cost
than the original facility. However, to ensure the proper level of services to City residents, the
City has determined that cost to be minimal compared to the benefits of having a sufficiently
sized building that can properly accommodate employees and the storage of records and
supplies.
5
Property
Funds on
Year
Tax
Bonding
Hand
Total
2010
$ -
$1,045,000
$ 85,000
$ 1,130,000
2011
$ -
$ -
$ -
$ -
2012
$ -
$ -
$ -
$ -
2013
$ -
$ -
$ -
$ -
2014
$ -
$ -
$ -
$ -
#5: Overlapping Debt in the City
See Exhibit 2.
#6: Project Priority & Relative Benefits vs. Cost
This is a high priority project. Essential core service functions of city government are provided
at City Hall. Adequate physical space to efficiently provide a high level of service is deemed
essential. The proper maintenance and storage of documents is also essential to this service.
#7: Operating Cost
The newly acquired facility has a larger square footage and will have a higher operating cost
than the original facility. However, to ensure the proper level of services to City residents, the
City has determined that cost to be minimal compared to the benefits of having a sufficiently
sized building that can properly accommodate employees and the storage of records and
supplies.
5
#8: Other Alternatives Considered
The City has considered a number of options. However, by meeting the space needs of the
employees in one properly sized and equipped facility, the City is achieving efficiency within
its core operations.
• EXHIBIT 1
1,390,000
City of Hugo (Economic Delopment Authority), Minnesota
GO Capital Improvment Plan Refunding Bonds, Series 2010
Current and Full Advance Refunding of Series 1998 and 2001
Debt Service Schedule
Date
Principal
Coupon
Interest
Total P+I
02/01/2011
215,000.00
0.750%
14,153.12
229,153.12
02/01/2012
210,000.00
1.100%
22,650.00
232,650.00
02/01/2013
220,000.00
1.350%
20,340.00
240,340.00
02/01/2014
225,000.00
1.750%
17,370.00
242,370.00
02/01/2015
125,000.00
2.100%
13,432.50
138,432.50
02/01/2016
130,000.00
2.500%
10,807.50
140,807.50
02/01/2017
130,000.00
2.750%
7,557.50
137,557.50
02/01/2018
135,000.00
2.950%
3,982.50
138,982.50
Total
$1,390,000.00
-
$110,293.12
$1,500,293.12
Yield Statistics
BondYear Dollars............................................................................................................................................................. $5,010.83
AverageLife...................................................................................................................................................................... 3.605 Years
AverageCoupon............................................................................................................................................................... 2.2010934%
NetInterest Cost (NIC)...................................................................................................................................................... 2.3814027%
TrueInterest Cost (TIC).................................................................................................................................................... 2.3776451%
Bond Yield for Arbitrage Purposes.................................................................................................................................... 2.1886556%
AllInclusive Cost (A1C)..................................................................................................................................................... 3.0964656%
IRS Form 8038
NetInterest Cost............................................................................................................................................................... 2.2010934%
WeightedAverage Maturity ............................................................................................................................................... 3.605 Years
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Exhibit 2
CITY OF HUGO, MINNESOTA
COMPUTATION OF DIRECT AND INDIRECT GENERAL OBLIGATION BONDED DEBT
June 7, 2010
Sources: Tax capacity data to estimate applicable percentages provided by Washington County.
Debt outstanding data provided by each governmental unit.
Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the city. This schedule
estimates the portion of the outstanding debt of those overlapping governments that is bome by the residents and businesses
of the City of Hugo. This process recognizes that, when considering the city's ability to issue and repay long-term debt,
the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply
that every taxpayer is a resident, and therfore responsible for repaying the debt, of each overlapping government.
t8) For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using tax capacity values.
Applicable percentages were estimated by determining the portion of another governmental unit's tax capacity value that is
within the city's boundaries and dividing it by each unit's total tax capacity value.
Estimated
Estimated
Share of
Debt
Percentage
Overlapping
Governmental Unit
Outstanding
Applicable (a)
Debt
Debt repaid with property taxes
Independent School District #624
$113,940,000
14.20%
$ 16,179,480
Independent School District #831
38,145,000
3.50%
1,335,075
Independent School District #832
23,186,793
5.10%
1,182,526
Independent School District #834
71,755,000
1.00%
717,550
Other debt
Washington County
117,060,000
4.90%
5,735,940
Metropolitan Council
36,150,000
0.40%
144,600
Regional Transit
193,960,000
0.50%
969,800
Subtotal, overlapping debt
26,264,971
City direct debt
14,102,890
14,102,890
Total direct and overlapping debt
$ 40,367,861
Sources: Tax capacity data to estimate applicable percentages provided by Washington County.
Debt outstanding data provided by each governmental unit.
Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the city. This schedule
estimates the portion of the outstanding debt of those overlapping governments that is bome by the residents and businesses
of the City of Hugo. This process recognizes that, when considering the city's ability to issue and repay long-term debt,
the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply
that every taxpayer is a resident, and therfore responsible for repaying the debt, of each overlapping government.
t8) For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using tax capacity values.
Applicable percentages were estimated by determining the portion of another governmental unit's tax capacity value that is
within the city's boundaries and dividing it by each unit's total tax capacity value.
STATE OF MINNESOTA
COUNTY OF WASHINGTON
CITY OF HUGO
I, the undersigned, being duly qualified and acting Clerk of the City of Hugo, Minnesota,
DO HEREBY CERTIFY that I have carefully compared the attached and foregoing extract of
minutes with the original minutes of a meeting of the City Council, duly called and held on the date
therein indicated, which are on file and of record in my office, and the same is a full, true and
complete transcript therefrom insofar as the same relates to a resolution giving preliminary
approval for the issuance of the City's general obligation capital improvement plan bonds and
adopting the City's capital improvement plan therefor.
WITNESS my hand on June 7, 2010.
City Clerk
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