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ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION — AUGUST 25, 2025 17 Finance Director Yang said the first two scenarios assume no change to PMP projects. She reminded that earlier discussion included splitting the 2028 PMP into two different years. That is not included in these two scenarios. Scenario A shows that if the City chose to only increase the levy, we would need to levy a larger amount. She used $350,000 as an estimate to ensure we could maintain the long term health of the fund. With that change, we would maintain a positive fund balance through 2029. Finance Director Yang said scenario B looks at bonding. The City would receive cash to fund the project, up front, in 2026. There would be no impact to the 2026 levy. The debt service would begin in 2027. The levy would increase by $163,000 in 2027. This would also only get us to 2029. The City would need to bond again in 2030 and increase the levy by $179,000 in 2031 to cover the new debt service. That would get the City to 2035. This is showing what bonding can do to the overall fund balance. Interest payments over the life of the 2026 bond is estimated to be $1.6 million. That would be a $3.3 million bond over 20 years. Interest payments over the life of the 2030 bond is estimated to be $2.7 million. That would be a $5.8 million bond over 20 years. Councilmember Holden said we will have to bond for the spine road. She asked how much we have to bond for TCAAP, including the water tower and all the utilities. Finance Director Yang recalled discussion regarding two issuances. Councilmember Rousseau asked if the water tower would be discussed in future MOUs with developers. Councilmember Weber thought the amount was $13 million. Councilmember Holden asked if that will be next year. Councilmember Weber said no. The only thing the City may be responsible for is the trunk line utilities. The water tower and any other utilities in the area can wait until development. Councilmember Holden understands that. She asked what the first bond amount would be. Councilmember Weber said $7 million. Councilmember Holden said if we bond for $7 million, which will cost us about $3 million in interest. So we will be spending $8-10 million just on bonding. Councilmember Monson said that is just for this scenario, which Staff is not recommending. Mayor Grant said in the packet it states the total interest to be paid over 20 years for the first bond would be $1.56 million. The second estimated to be $2.7 million. That's a lot of interest. Finance Director Yang said the key difference between these scenarios is if we bond, there are structured debt service payments. That means a level levy. That is $350,000 in scenario A vs. $163,000 in scenario B with less burden on taxpayers, annually. You are also spreading the tax burden to current and new users. The Fund Balance capacity is much larger because we would have more dollars to spread, simply bonding.