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FINANCING NEW CITY HALL & PUBLIC WORKS BLDG

CIP BONDS SAVES VICTORIA TAXPAYERS $650,000

Victoria Staff asked councilmembers for guidance on March 10th as to which direction the city should go to finance the new Victoria City Hall/Library and the new Public Works facility. Staff presented three options, which were reviewed by the Finance Committee: General Obligation Capital Improvement Bonds, Lease Revenue Bonds, or a Combination that included City Cash.

Council recommended using the General Obligation Capital Improvement Bonds because this route will save Victoria taxpayers approximately $650,000. If the city receives a petition for a reverse referendum, the city can prepare for the referendum or else switch to the Lease Revenue Bonds which, although much more expensive, do not require a referendum, which is also costly.

Said Kelly Grinnell, Victoria Finance Manager, "The Finance Committee recommended the Capital Improvement Bonds mainly due to the $650,000 savings, which is due to the lower interest rate. If a petition comes in, we can switch to a Lease Revenue or hold a referendum. We also proposed to use cash funds we've accumulated to offset initial payments for debt service, to keep the tax rate lower. We're projecting a 38% tax rate indefinitely."

Councilmember Jim Crowley questioned the $5.615 million cited for the CIP Bonds.

Kelly replied, "Project cost is $5.5 million. Issuance cost is $115,000."

Councilmember Crowley asked how the number changed from $5 million and where it's coming from.

"That number has been out there for a while," said City Manager Don Uram. "The approval is non-specific in amount tonight. We'll have a better number for you when we get our construction numbers back."

Mr. Uram said the upcoming public hearing scheduled for April 14th is proposed to state "not to exceed $6.4 million to give Council some cushion to make decisions as necessary." Whatever that number becomes, the city can spend less than that amount but not more than that amount. He said staff is looking for financing direction at this time.

"If we receive a petition with 5% of the voters voting in the last election [which is the legal petition rule] within the 30-day time period, the city council would have the opportunity to make a choice, whether to have the referendum or proceed with Lease Revenue Bonds," said Mr. Uram. "Five percent of the voters is just over 200 people."

If a petition is to be filed with the City Clerk, it must be filed within 30 days after the public hearing. A public hearing is scheduled for April 14th. Said Mr. Uram, "On May 14th, the 30-day petition period ends."

"We expect to receive contractor bids on April 1st and 3rd, with the potential to award contracts at our April 14th meeting," he said.

"There is a lot of work ahead," continued Mr. Uram. "Council has a lot of opportunity for decisions."

Stated Mayor Tom O'Connor, "To be clear, the referendum would be on the financing, not if the construction goes forward." In other words, a "successful" referendum would mean Victoria taxpayers would be paying an additional $650,000 for the new City Hall/Library and Public Works facility.

Paul Donna, the city's financial consultant with Northland Securities, was asked to comment on the upcoming bond sale. "With your AA+ rating," said Mr. Donna, "there'd be tremendous appetite for your bonds. There'd be no concern on our part for the city to market the bonds."

Public Hearing April 14th

Financing City Buildings

Council called for a Public Hearing on Monday, April 14th, to finance the new Victoria City Hall/Library and Public Works Facility using General Obligation Capital Improvement Bonds, the least expensive route for Victoria taxpayers.

Before adopting a Capital Improvement Plan or issuing bonds under a CIP Plan, a public hearing is required. The hearing will be held at City Hall on Rose Street at approximately 6:30 p.m.

Councilmember Crowley clarified, "The motion is to approve $6.4 million maximum and we expect it to be less than that." As Mr. Uram stated, "In October we can lower that number but we cannot go higher. There's $5 million for construction and $1 million for the land. We're not trying to change the deal."

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