3.5. SR 05-27-2003 - Laserfiche WebLink

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Pover MEMORANDUM *Item 3.5.* TO: FROM: DATE: SUBJECT: Mayor and City Council Lori Johnson, Finance Director May 27, 2003 Resolution Accepting Bid and Authorizing Execution of Contract in the Matter of the Pavement Rehabilitation Improvement of 2003 The assessment hearing for the 2003 street rehabilitation project was held recently, but contract award and action on the resolution adopting the final assessment roll were withheld. This was done because of pending legislation that would have eliminated the city's ability to levy for new public improvement bonds. As you know, the city is paying approximately two-thirds of this project, part of which will be paid with property taxes. Although at this point the structure of the bonds has not been determined, the ability to levy to meet debt service as needed is crucial to this phase and future phases of this long term project. A recent Senate plan now gives cities a window of time in which to preserve their right to levy for bonds. The League of Minnesota Cities Bulletin summarized the new language as follows: "To achieve the freeze, cities would be prohibited from incurring new debt that would require an increased property tax levy in 2004 or 2005 ........ The bill would allow bonds issued before June 1, 2003, as long as: 1) an agreement for the sale of the bonds has been entered into between a municipality and a purchaser or underwriter by that date; 2) the municipality is party to a contract or letter of understanding entered into before June 1, 2003, with the state or federal government that requires the municipality to pay for a project; or 3) the municipality has entered into a contract with a builder or supplier before June 1, 2003, for a project funded with the bonds." As we all know, the Legislature is still working on the final tax bill so the above language is by no means final. However, the best option now appears to be to meet the June 1 deadline by awarding the construction contract so the 2003 street rehabilitation project can move forward in 2003. I have discussed this issue with both Jim O'Meara, bond counsel, and Mark Ruff, financial advisor, and have gotten their respective interpretations of the proposed legislation and their thoughts on how this provision may change as the tax bill continues to be negotiated. Both agree that by having the 2003 street rehabilitation contract awarded, signed, and delivered to the city before June 1, the city