2008_0609_packet - Laserfiche WebLink

Home

Department Approval t InA Rls�&Spvl� REQUEST FOR COUNCIL ACTION Date: 06/09/05 Item No.: 12.d City Manager Approval Item Description: Resolution Approving the Arena Refrigeration System Funding Plan BACKGROUND By previous action, the City Council has directed Staff to continue moving forward With the replacement of the Arena refrigeration system. The Council is now asked to formally approve a funding plan by resolution. The estimated cost of the project is between $1.5 and $2.4 million. The Building Replacement Fund has a current balance of $300,000 which is currently earmarked for this project. As a result, the City will have to secure approximately $1.2 to $2.1 million dollars above and beyond what is available in the Building Replacement Fund. In previous discussions Staff identified a number of potential funding sources for the proj ect, including the use of a temporary loan from the City's Street Infrastructure Replacement Fund which is used to maintain and replace City streets. However, given the size of the loan required to fund the project and recognizing that the City would have limited ability to repay the loan in any reasonable timeframe, Staff recommends that the City borrow money through the issuance of equipment certificates. Equipment certificates work much the same as a City bond. The certificates would be repaid over a 10-year period and can be issued without voter approval. Staff s Recommendation is based on the following: 1) State - imposed levy limits that are in place for the 2009 -2011 fiscal years would effectively prohibit the City from increasing the tax levy to repay the loan in a reasonable amount of time. 2) Transferring monies away from the Infrastructure Fund for an extended period will result in a substantial decline in the City's street pavement condition rating. 3) Drawing further on existing City reserves, would violate the Council- approved Operating Budget Reserve Policy, and could potentially jeopardize the City's bond rating. 4) Issuing debt for capital improvements is allowed under State Statute and is consistent with the City's Debt Policy. 5) Issuing approximately $2 million in debt to extend the life of an existing capital asset will not jeopardize the City's bond rating. The City's debt per capita is $322. The median level for cities the size of Roseville is $750. 6} Under State Statute, the City has the capacity to have up to $55 million in outstanding debt. Currently we have only $5 million which is approximately the same amount of debt we had when we issued $10 Million in bonds to finance the City Hall and Public Works building expansion in 2003. Page 1 of 4