17-Capital Needs and Bond Sale - Laserfiche WebLink

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Item No. 17 memorandum TO: Mayor & City Council FROM: John Godwin, City Manager SUBJECT: CAPITAL NEEDS & BOND SALE DATE: December 5, 2016 BACKGROUND: In 2013 we identified approximately $26 million in road replacement needs, as well as needed improvements for several aging city parks. We have kept that list of streets prioritized as part of the CIP submitted to the council with each annual budget, and recently updated estimated costs. Funding for these projects will have to come from some sort of bond sale. Based on current evaluations, a single cent on the tax rate equals almost $150,000 per year in revenue. That revenue would in turn fund approximately $2 million per year in debt. STATUS OF ISSUE: Because of the recent Paris Junior College election, this might be a good time to consider a rate increase for this purpose. PJC's tax rate is 18.75 cents per $100 of value, but is anticipated to decrease to eight cents per hundred. This means the city could raise its rate by five cents, thereby funding about $10 million in debt while leaving the net rate paid by Paris property owners below what it is now. A ranked list of recommended streets is attached, with estimated cost, location by district, and a running total. As you can see, these streets exceed the amount we would have available, so the council will need to decide if it wishes to change our rankings, and/or add other streets. I would also ask that the council consider including $400,000 for park improvements. BUDGET: A $10 million bond sale would be bank qualified, allowing us to receive the lowest possible interest rate. RECOMMENDATION: Provide direction to staff regarding the sale of certificates of obligation in the amount of $10 million.