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HomeMy WebLinkAboutRes2016-045 Sponsored by: Hunt CITY OF SEWARD, ALASKA RESOLUTION 2016-045 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, PROVIDING FOR THE SUBMISSION TO THE QUALIFIED VOTERS OF THE CITY OF SEWARD THE QUESTION OF AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $3,000,000 IN GENERAL OBLIGATION BONDS OF THE CITY TO FINANCE ALL OR A PORTION OF THE PLANNING, DESIGN AND CONSTRUCTION OF ROAD IMPROVEMENT PROJECTS, AT AN ELECTION IN AND FOR THE CITY OF SEWARD ON OCTOBER 4, 2016 WHEREAS, there is identified in the City a substantial and immediate need for repair and repaving of many City streets and roads; and WHEREAS, the City has successfully secured an initial $2.3 million and more recently $530,000 in Federal and State pass through funding that will address nearly 80% of the identified priorities; and WHEREAS, the State is administering the road repaving contract as a condition of the Federal grant, with work scheduled to begin in 2017; and WHEREAS, the City has an opportunity to realize substantial savings through economies of scale, time and location by adding to the contractor's scope of work to include additional roads and road sections not otherwise scheduled for improvement, provided sufficient funding is identified beforehand; and WHEREAS, the additional funding is designed to complete sections of roads in Forest Acres, pave Oak Street to Seward Mountain Haven, and pave Dieckgraeff Road from the Seward Highway to Dimond Boulevard; and WHEREAS, under provisions of Alaska Statutes a municipality may incur general obligation debt only after a bond authorization is approved by a majority of those voting on the question at a regular or special election. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 1. It is hereby determined to be for a public purpose and in the public interest of the City to borrow through the issuance of general obligation bonded indebtedness in an amount not to exceed $3,000,000 for the purpose of financing the capital costs of planning, design and construction of road improvements in the City. The sum of$3,000,000 shall be borrowed by, for and on behalf of the City of Seward for the road improvements and shall be evidenced by the CITY OF SEWARD, ALASKA RESOLUTION 2016-045 issuance of general obligation bonds of the City. The bond proceeds shall be used for the road improvements only. The full faith and credit of the City are pledged for the payment of the principal of and interest on the Bonds and ad valorem taxes upon all taxable property in the City shall be levied without limitation as to rate or amount to pay the principal of and interest on the bonds when due. Section 2. The City shall submit the following proposition, in substantially the following form, to the qualified voters of the City of Seward at the October 4, 2016 Regular Municipal Election. The proposition must receive an affirmative vote from a majority of the qualified voters voting on the question in order to be approved. Proposition No. 1 General Obligation Bonds for Seward Road Improvements Shall the City of Seward incur debt and issue general obligation bonds in an amount not to exceed three million dollars ($3,000,000) to finance the planning, design and construction of road improvements in the City? The bonds shall be secured by a pledge of the full faith and credit of the City. It is expected that annual payments of principal and interest on the Bonds will be Two Hundred Thirty Thousand dollars ($230,000), or a 0.72 increase in the mill rate (from 3.12 mills to 3.84 mills, equal to an increase of$72 per $100,000 in property value) or the approximate equivalent of a one-fifth of one percent (0.005) sales tax (from 4.0% to 4.2%). II PROPOSITION NO. 1 YES NO A "Yes" vote authorizes the issuance of not to exceed $3 million dollars of general obligation bonds for road improvement projects. A "No" vote does not authorize the issuance of not to exceed $3 million dollars of general obligation bonds for road improvement projects. Section 3. Section 1 of this Resolution shall become effective only if the proposition described in therein is approved by a majority of the qualified voters of the City of Seward voting on the proposition at the election on October 4, 2016. The remaining sections shall become effective upon adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 25th day of July, 2016. CITY OF SEWARD,ALASKA RESOLUTION 2016-045 THE CITY OF SEWARD,ALASKA p/ 2'L i�zeiemAzyy-- can Bardarson, Mayor AYES: Casagranda, Keil, Squires, McClure, Altermatt, Bardarson NOES: None ABSENT: Butts ABSTAIN: None ATTEST: 41,4 / /& ' Bda Ballou, 0 C„ Acting City Clerk � (City Seat ".,: C' 8.17:14:;;;14*:*;!, 3 •a 'C/ app 4r �O/:.0,=&. moi.'' t''y gY • 1 .• •• t ..• V.' tR S •. • Agenda Statement Meeting Date: July 25, 2016 To: City Council Through: Jim Hunt, City Manager From: Ron Long, ACM/ComDev Agenda Item: Placing on the October 4, 2016 ballot the question of authorizing issuance of General Obligation bonds not to exceed $3,000,000 (three million dollars) for road repair and improvements BACKGROUND & JUSTIFICATION: The City has successfully pursued grant funding to repair a portion of the City’s roads and streets. The majority of the funding is from a federal award, and is on condition that the State Department of Transportation and Public Facilities (AK DOT/PF) administer the contract on a percentage of award basis. Administer in this context is meant to include all engineering, permitting, design, bid preparation, support, and contract administration. The roads and road sections needing work have been prioritized through Council, administrative, and State processes. The funding received to date will repair the worst areas, but is not sufficient to do all of the identified work. While there are more roads in need of repair than money available, the cost to complete the listed repairs will only increase with time. The City has an opportunity to realize significant cost savings for the work not covered by the grant awards by piggybacking onto the State-administered project through a separate contract with the successful bidder. This is feasible only if funding is assured in advance of the contract award. It is not realistic to expect further state or federal grants towards this project, and funding the remaining work from the City’s fund balance would deplete the fund. The public has been clear in their desire to see the roads repaired, as evidenced by the number of calls, visits and emails on this subject. The public can authorize the City to incur debt in order to complete projects that are in the public interest by voting at a regular or special election to authorize the issuance of General Obligation (GO) bonds. Projected debt service for this proposed twenty year issue is estimated at $230,000 per year. This resolution asks the voters to authorize or not authorize the issuance of GO bonds not to exceed $3,000,000, with the following question and ballot language: Proposition No. X General Obligation Bonds for Seward Road Improvements Shall the City of Seward incur debt and issue general obligation bonds in an amount not to exceed three m ill ion dollars ($3,000,000) to finance the planning, design and construction of road improvements in the City? The bonds shall be secured by a pledge of the full faith and credit of the City. It is expected that annual payments of principal and interest on the Bonds will be Two Hundred Thirty Thousand dollars ($230,000), or a 0.72 increase in the mill rate (from 3.12 mills to 3.84 mills, equal to an increase of $72 per $100,000 in property value) or the approximate equivalent of a one-fifth of one percent (0.005) sales tax (from 4.0% to 4.2%). YES _____ NO _____ A “Yes” vote authorizes the issuance of not to exceed $3 million dollars of general obligation bonds for road improvement projects. A "No" vote does not authorize the issuance of not to exceed $3 million dollars of general obligation bonds for road improvement projects. INTENT: To present voters of the City the option to finance the unfunded remainder of identified road improvements needed in Seward. Yes No N/A CONSISTENCY CHECKLIST: Comprehensive Plan (3.4, 3.4.1): Support adequate funding to maintain 1. safe roads year round. Support forward funding fo r major road repairs X and upgrades. Strategic Plan : P. 4 “Transportation facilities…that meet the needs of 2. X residents, business and visitors”. 3. Other (list): X FISCAL NOTE: The General Fund does not have sufficient reserves to withstand annual payments of $230,000 in additional debt service costs without additional revenues. If voters approve the issuance of bonds, Council could elect to increase property taxes from 3.12 mills (.00312) to 3.84 mills (.00384). For an average homeowner, this would equate to a $143.52 annual increase in property tax on a home valued at $200,000. Alternatively, the same revenues could be generated through an increase in the sales tax rate from 4.0% to 4.2%. Approved by Finance Department: __________________________ ATTORNEY REVIEW: Yes________ No___X______ Not Applicable_________ RECOMMENDATION: City Council approve Resolution 2016-___ Placing on the October 4, 2016 ballot the question of authorizing issuance of General Obligation bonds not to exceed $3,000,000 (three million dollars) for road repair and improvements.