2022.10.25 CC Packet - Laserfiche WebLink

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October 11, 2022 Page 3 of 4 Council Business 1. Consider a Resolution Confirming the City’s Commitment to Becoming External Debt-Free for the Financing of Street Projects by 2025. City Manager Massopust indicated Finance Director Foschi would be presenting this item to the Council. Finance Director Foschi stated since 2015 the City Council has continued to approve the staff‐ recommended initiative to end external financing of street projects by 2025. Ending external financing eliminates debt issuance costs, provides greater financial flexibility and pays interest back to the City for financing of future projects. In 2015 the City also developed its Street Reconstruction Plan of reconstructing about 2 miles of streets each year. This allows for more consistent budgeting and planning of internal financing. On September 12, 2017 the City Council adopted a resolution directing staff to remove Local Government Aid (LGA) from the General Fund and add it to the Street Financing Fund, to assist with the internal financing of street projects. At the June 28, 2022 Council discussed the City’s current financial goals and their desire to formalize Council’s long‐term commitment to this initiative. Community Assets and Development Director Schlichting commented on the City’s comprehensive street plan which was created in 2008. He explained this plan breaks the City’s streets into different 10 year periods, noting each City street would be replaced every 25 years going forward. The variable costs for street reconstruction costs were reviewed with the Council. Finance Director Foschi commented further on the City’s internal financing plan which provided a better foundation for the City’s debt planning. She reported this plan would have interest paid directly back to the program, would provide full control over the interest rate, would have no debt issuance costs and would provide flexible term lengths and payment amounts. She described how LGA was worked into the City’s streets financing fund. Staff commented further on the benefits of the debt-free streets program and recommended approval of the proposed Resolution. Councilmember Abdulle asked questioned if the City should be concerned about the big levy increase that would occur from 2016 to 2025. Finance Director Foschi reported the City was through the 2022 tax levy and has the preliminary budget in place for 2023. She believed the finish line was right around the corner. Councilmember Allen commented this increase only relates to the street debt levy and not the overall debt of the City. He stated he supported this initiative because it would save the City money over time. He questioned if there were other communities that had pursued this type of program. Finance Director Foschi indicated she was not aware of any other communities that have pursued this type of initiative, as they generally issue debt each year for their street projects. Mayor Niedfeldt-Thomas thanked staff for the detailed presentation on this program. She appreciated the fact the Council would be adopting a Resolution showing their commitment to this program. In addition, she appreciated the foresight of the previous Council’s to put this program in place. She commented on how the reuse of aggregate had assisted with keeping costs down for the 2020, 2021 and 2022 street projects. She inquired if these savings would be seen going forward. Community Assets and Development Director Schlichting indicated staff would work to preserve aggregate when possible on future street projects. Councilmember Abdulle thanked staff for all of their work on this plan. He encouraged staff to consider pursuing less harmful materials going forward if costs allow. Motion by Councilmember Axberg, seconded by Councilmember Abdulle to approve a Resolution confirming the City’s commitment to becoming external debt-free for the financing of street projects by 2025. A roll call vote was taken. Council Business 1. Consider a Resolution Confirming the City’s Commitment to Becoming External Debt-Free for the Financing of Street Projects by 2025.