5.7.B. SR 03-13-2006 - Laserfiche WebLink

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City of Elk River REQUEST FOR COUNCIL ACTION Agenda Section Meeting Date Worksession March 13, 2006 Item Description Libra Financin Administrator Introduction The Library project is proceeding with possible construction as early as 2007. Although a fIrm construction estimate is not yet available, the fInancing plan for the project needs to be approved. This will ensure that all legal requirements are met if bonds are issued for the project. The plan should identify funding sources and approximate share of the project funded by each, but it does not need to identify exact amounts as those will change slightly as the project budget changes. Discussion The most likely plan for fInancing this project includes a combination of bonding and use of reserve funds. There are several funds including the library, government buildings reserve, capital outlay reserve, and RDF reserve with money available. If a project estimate of $3.5 million is approved, reserve funds could not fund the project and additional funding would need to come through the issuance of bonds. Recent legislation allows cities to issue capital improvement bonds for certain city buildings and improvements, including a library. In order to issue capital improvement bonds, the project needs to be part of an approved fIve-year capital improvement plan. As you know, the library was included in the capital improvement plan approved by the Council in 2005; however, state law requires that an offlcial capital improvement plan be approved after a public hearing. Therefore, in order to qualify for the issuance of these bonds, a public hearing would need to be held to adopt the capital improvement plan. A second public hearing is required to authorize the issuance of the capital improvement bonds. These bonds are subject to reverse referendum by petition of 5 percent of the voters in the last general election. Issuance of capital improvement bonds does, however, preserve the city's right to levy for the payment of the bonds. If funds are available in the future from other sources such as the host fee or RDF payment in lieu of tax, the tax levy could be reduced or cancelled on an annual basis. In addition to city funds, the county's new grant program may be available. At this time there is little information to determine the extent to which the library may be eligible. In addition, some of the materials and resources and indoor environmental quality items under the LEED certifIcation may be eligible for landfill funds because they are either diverting construction waste from the landfill, reusing items, or have recycled content. The amounts eligible from both the county program and landfill funding would need to be determined later when the project materials are identifIed. Finally, it is possible that approximately $1,500,000 could be funded initially through reserves. The actual amount available depends upon how the Pinewood purchase is fmanced and how soon the Council wants to proceed with additional improvements to the public works building. s: \ Council\Lori\2006\Library Financing.doc