6.3. SR 02-11-2002 - Laserfiche WebLink

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River TO: Terry Maurer FROM: Lori Johnson DATE: February 7, 2002 SUBJECT: MEMORANDUM Park Pointe Bonding Request Cascade I Land Company has requested that the City install the internal public improvements necessary to service the Park Pointe plat and assess the property for the cost of the improvements. I understand that your estimated cost for these improvements is approximately $1,000,000. Before the Council approves financing these improvements, there are several factors to consider. The Financial Management Plan recently adopted by the Council addresses this issue in two sections. The Plan states, "the City will plan debt to avoid issuing more than $10,000,000 in tax exempt bonds during any calendar year and apply 'bank qualified' status to all issues." The Plan also states, "in most cases, private developers will be responsible for the construction of...systems needed to serve new development. The City may install infrastructure and assess property owners when this approach provides the best alternative." First, let's address the "bank qualified" issue. In 2002 the City plans to issue bonds for several projects including the public safety and ERMU buildings, Zane Street and 175m Avenue improvements, and equipment certificates for the City and ERMU. The total to be issued is estimated to be almost $10,000,000. Therefore, it is not possible to finance the Park Pointe improvements in 2002 and retain the "bank qualified" status on the City's 2002 bond issues. In fact, it may be necessary to adjust the timing of some of the City's issues. The City may, of course, issue bonds totaling more than $10,000,000 in a year, but they won't be bank qualified. The ability to issue bank qualified bonds is important because the interest rate on bank qualified bonds is slightly lower than the rate on bonds that are not bank qualified. A similar situation came up several years ago when Guardian Angels wanted the City to issue conduit bonds for a project that put the City over the $10,000,000 limit. The Council agreed to assist Guardian Angels under the condition that Guardian Angels pay the additional interest costs incurred because the bonds were no longer bank qualified.