2015.07.28 WS Minutes - Laserfiche WebLink

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b .0W of NEW UATON the city that works for you Council Worksession July 28, 2015 5:00 pm Present: Mayor Dave Jacobsen Councilmember Gina Bauman Councilmember Brian Strub Councilmember Paul Jacobsen Councilmember Mary Burg Absent: Staff in Attendance: Dean Lotter, Finance Director Brenda Davitt, Community Assets & Development Director Craig Schlichting Guests in Attendance: Mark Ruff, Ehlers & Associates Debt Management — Future road Projects and Tax levy_ Implications Lotter stated the goal of this item was to get the Council looking 10 years out on the City's future road projects and how this would impact the City's tax levies. He commented that the proposed road projects were more intense in the coming 10 years than the previous 10 years. He indicated that the Council would be revisiting this issue on several occasions before final decisions are made on the 2016 budget. He reported Schlichting and Davitt would be presenting this item to the Council. Davitt provided the Council with a broad overview on the City's proposed street reconstruction projects over the next 10 years and how these projects would be funded. She discussed the amount of debt that would need to be issued in order to cover the expense of the proposed projects. Schlichting commented that the City was proposing to reconstruct 30 miles in the next 10 years. Davitt provided detailed information on three financing options available to the Council to cover the expense of the street projects. The first option would follow the City's current financing practice with 25% of the expenses being assessed to benefiting property owners. The long-term implications of this funding option was reviewed with the Council. Items to consider with Option 1 would be that the City would pay out close to $5 million in interest and the debt to levy ratio in 2025 would be 25%. Mark Ruff, Ehlers & Associates, explained that a 25% debt to levy ratio could raise some red flags financially. He encouraged the Council to pay attention to this ratio and keep it under 20%. Davitt discussed a second option available to the City noting this option would move curb and gutter expenses to the storm water fund. All projects would be budgeted for less administrative fees and curb and gutter. The long-term impacts of this option were reviewed with the Council and it was noted the City would have a 20% debt to levy ratio by 2025. Davitt indicated a third option available to the City would use mixed debt or internal loans from the closed bond fund. This option would eliminate the expense of legal and bond fees. She reviewed how option three would impact the City over time. She discussed the benefits of option three noting debt payments would be