HomeMy WebLinkAbout05.21.2001COUNCIL WORK SESSION
May 21, 2001
3:15 p.m.
Council Chambers
Members present: Mayor Rooff, Anders, Krizek, Gronen, Getty, Berry, Jordan.
Members absent: Murphy.
Moved by Gronen, seconded by Berry that the Agenda, as proposed, be approved. Ayes: Five.
Absent: Jordan, Murphy. Motion carried.
Mayor Rooff reviewed the items on tonight's agenda regarding the bond sale. Mayor Rooff
reported that the issuance of not to exceed $700,000 General Obligation Bonds to provide
working capital will be removed from tonight's council agenda as the Chief Financial Officer has
informed the council that the city with end the year with a positive cash fund balance.
The issuance of not to exceed $6,025,000 General Obligation Bonds for an Essential Corporate
Purpose was reviewed. Larry Burger, Vice President of Speer Financial, stated that essential
corporate bonds are bonds that are essential for the operation of the city, such as construction and
repairs of streets and sidewalks, improvements to the parks and the Airport, equipment for the
fire, police, sanitation, street and civil defense departments. Mr. Burger stated that $3,000,000 is
for improvements to the Water Pollution Facility.
Jordan now present at 3:30 p.m.
The issuance of not to exceed $700,000 General Obligation Bonds for a General Corporate
Purpose was reviewed. Michelle Weidner, Chief Financial Officer, stated that $250,000 is for
improvements to the Five Sullivan Brothers Convention Center, $105,000 for ADA compliance,
$50,000.00 for computer replacement, $118,000 for swimming pool renovations, $80,000 for
roofing and air conditioning and boiler replacement at the fire station, $44,000 for remodeling of
city buildings and $47,000 for improvements to the Carnegie Library.
The issuance of not to exceed $660,000 General Obligation Bonds for a General Corporate
Purpose was reviewed. Mayor Rooff stated that the bonds will be used to repair the West Fifth
Street ramp.
The issuance of not to exceed $525,000 General Obligation Bonds for a General Corporate
Purpose was reviewed. Mayor Rooff stated that the bonds will be used for improvements to city
buildings such as the Street Department, Central Garage, Cultural and Arts Center, fire station,
Library, the stadium and Young Arena.
The issuance of not to exceed $360,000 General Obligation Bonds for a General Corporate
Purpose was reviewed. Mayor Rooff stated that the bonds will be used for improvements to the
golf courses and equipment for the golf courses. Paul Huting, Leisure Services Director, stated
that the improvements include: cart path construction, parking lot improvement at Riverfront
Stadium, and restaurant renovation at some of the buildings.
Mayor Rooff stated that he is pleased that all the items are in the bonding program. Mayor Rooff
stated that hopefully the city will be awarded the Vision Iowa funds for the Downtown Riverfront
Renaissance Plan. If that happens, the city will have to shift use of the funds.
Mr. Burger commented that the city can do that as long as the items for an essential corporate
purpose stay with the essential purpose bonds for the city. Mr. Burger stated that this is a good
time for bonding purposes as the interest rates are so low, and he feels that the city could see an
interest rate of 4.6 to 4.7 percent. Mr. Burger stated that the good interest rate is why the city is
doing the $4 million refunding bond. Mr. Burger stated that we cannot predict what the interest
rate will be next year, and with this bonding program we are locking the interest rate in for 15
years. Mr. Burger commented that the city is issuing $3 million for the sewer system this year,
which is the final GO Bond issuance for sewer. Mr. Burger stated that some of the bonding for
Council Work Session
May 21, 2001
Page 2
the sewer system improvements were with sewer revenue bonds, but then the city switched to
General Obligation Bonds as it has a lower interest rate. Also with the General Obligation Bonds,
the city does not have to have set asides or revenues, and the city transfers sewer funds to the
debt service to pay off the bonds. Don Temeyer, City Planner, stated possible future projects will
include: the Northwest Interceptor project, Niagara Lift Station and Downing Avenue project.
Mayor Rooff stated it is important once we have the authority to issue the bonds that the council
gets together to decide what projects will be funded.
Mr. Burger stated that the city's bonding debt is $62 million, and the city has $103 million debt
capacity. Mr. Burger reported that this year's issuance totals $13.8 million, with $3.8 million
refunding 1993A General Obligation Bonds and $3 million for sewer improvements. Mr. Burger
stated that the city's total bonding debt is $96 million, including sewer. Mr. Burger stated that
the city will pay off 81 percent of the $62 million in ten years if the city doesn't borrow any more.
Councilperson Anders stated that in past years the city has bonded $4.5 to $5 million per year.
Councilperson Anders asked when looking at all the projects this year was there any consideration
not to bond as much because of the city's financial times, maybe curb the spending a little.
Councilperson Jordan stated he agrees with Councilperson Anders, and he asked how much could
the city save in one year if we don't bond at all. Mr. Burger stated that the first two years of $10
million in bonds the total payment would be $425,000.
Councilperson Anders stated if the city bonds at that level we will need the same number of
employees to get the work done so maybe we should downsize. Mr. Temeyer stated that a lot of
the work is bid out to private companies. Eric Thorson, City Engineer, stated that the city does
do some of the work such as the culvert project, sidewalk repair and the Virden Creek project.
Mr. Burger stated that all his clients across Iowa discuss increasing their bond issuance when the
interest rates are low, and when rates go up cut back on bond issuance in order to get going on
their projects. Mr. Burger stated that because of the low interest rate several of his clients have
indicated they will do another bond sale this year to lock in the interest rate for projects that they
will not do until next spring. Mr. Burger stated that the refund payment will not raise the debt
service because of the low interest rate.
Mr. Burger reported that the sewer bonds have been bonded for 25 years. Mr: Burger reviewed
the city's bond rating history. In the early 1980s the city lost one-third of its assessed value. In
1983 the city had an Aa bond rating, then Baa in 1987 to the present A2 bond rating. Mr. Burger
stated that it takes approximately four years after a bond downgrade to get the rating back up.
Mr. Burger stated that the insurance companies look at Moody's rating, and if Moody's issues a
downgrade, the city will have to buy insurance. Mr. Burger commented that if the city does not
show Moody's a positive picture, they will give the city a downgrade. Mr. Burger stated that the
bond sale will be held on June 7, 2001. Mr. Burger stated that the city should hear shortly from
Moody' s.
Mayor Rooff stated that we do not have a definite answer on the Road Use Tax fund balance at
this time, but the rest of the funds are in the black.
The issuance of not to exceed $410,000 General Obligation Bonds for a General Corporate
Purpose was reviewed. Mayor Rooff stated that these bonds will be used for the retirement sick
leave buyout, as recommended by the Financial Group. Mr. Burger stated that the $410,000 will
disappear within five years and the city has a $2 million liability with the frozen sick leave
payouts. Mr. Burger commented that the Financial Group recommended that the city move the
sick leave payouts from the General Fund to one year bonding. It will take six years instead of
five years to pay the sick leave amounts. Mr. Burger commented that the interest rate on
$410,000 is about 2 percent higher as it is taxable, but the payment will be out of the Debt Service
Fund.
Council Work Session
May 21, 2001
Page 3
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The issuance of not to exceed $1,320,000 General Obligation Bonds for a General Corporate
Purpose was reviewed. Ms. Weidner reported that $865,000 is for renovation of the former
depot for the UNICUE, with the remainder to be used for the Downtown Riverfront Renaissance
Plan. Mayor Rooff commented that if the city is not awarded the Vision Iowa funds, we can use
the money for other projects.
The issuance of not to exceed $4,000,000 General Obligation Bonds for an Essential Corporate
Purpose was reviewed. Mr. Burger stated that these bonds will be used for refunding the 1993A
General Obligation Bonds. We will be refinancing $3.8 million at a lower interest rate which
could save the city $100,000.
Ms. Weidner reviewed the resolution on tonight's council agenda for various end of Fiscal Year
2001 fund transfers and bond proceed reallocations.
With no further business before the council, it was moved by Getty, seconded by Jordan that the
meeting be adjourned at 4:12 p.m. Ayes: Six. Absent: Murphy. Motion carried.
Nancy Eckert
City Clerk