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Council Discussion Staff is seeking direction from the City Council regarding debt service and franchise fees adoption for the Lake Johanna Fire Department. CIP Funding Update —Debt Service & Franchise Fees Included in the 2025-2029 CIP budget are franchise fee assumptions of $375,000 annually, estimated to start in 2025 to offset debt service for the new fire station. Per the August 19 budget work session, Council directed staff to work with the City's financial advisor, Ehler's, to determine the timing and structure of a bond issuance to occur in the Spring of 2025, in order to align with the anticipated development of the new fire station. Staff and Ehler's recommend that the City issue bonds independently of one overarching project bond, as this will allow the City to take advantage of more favorable interest rates through the issuance of Bank Qualified (BQ) bonds (less than $10 million of tax-exempt bonds). Attachment A are the preliminary Series 2025 general obligation CIP bond schedules provided by Ehler's, highlighting one scenario at current market bank qualified (BQ) AAA rates and the second scenario at current market BQ AAA rates with a 75 basis points cushion. The scenarios assume the City will issue bonds at a par value between $4,645,000 and $4,690,000, of which $4,425,000 would be directed to the project construction fund, with remaining funds to cover the costs of issuance, underwriter fees, and interest. Each scenario assumes the bonds would settle on May 15, 2025 at different maturity dates of 10 years, 15 years, and 20 years. What term or debt service schedule does Council want to move forward with? This direction is needed in order to inform Xcel Energy of the targeted revenue amount, which will determine the franchise fee rate structure. Attachment B contains three electric franchise fee rate structure scenarios provided by Xcel Energy. The scenarios assume a $375,000 revenue target, with residential properties assessed a $3.00 monthly fee and other property rates varying slightly. Staff will provide Xcel Energy with Council's direction on the targeted revenue amount and will bring forward an updated rate structure back to Council for review. With the debt service payments expected to occur in February 2026, staff recommends adoption of the franchise fee rate structure no later than November 1, 2024 for implementation by February 1, 2025. Staff has confirmed with the City Attorney that a public hearing is not required for the adoption of an ordinance for the implementation of franchise fees and/or approval of the franchise agreements with Xcel Energy. For all ordinances, a notice is posted on the City website 10 days in advance of the Council's consideration to inform the public of the upcoming ordinance review. Council should discuss and provide direction to city staff on having an optional public hearing at the October meeting. What additional thoughts, if any, should staff consider? Budtet Impact None. Attachments A. Preliminary Series 2025 General Obligation CIP Bond Schedules B. Electric Franchise Fee Rate Structure Scenarios Page 2 of 2