HomeMy WebLinkAboutIX-02 and 02(a) CIP Bonds Planned for Public Works Facility
City Council Memorandum
To: Mayor Fasbender & City Councilmembers
From: Chris Eitemiller, Finance Manager
Date: February 22, 2022
Item: Approve Plan for Public Works Storage Facility
Council Action Requested:
Approve the capital plan for the Public works storage facility.
Background Information:
The City is proposing to finance the construction of a Public Works facility through the issuance of
General Obligation Capital Improvement Plan Bonds, pursuant to Minnesota Statutes, Section 475.521.
As part of the issuing process, the City is required to hold a public hearing to receive public comment
prior to the consideration of approval of a Capital Improvement Plan. The public hearing notice was
published on Thursday, February 3, 2022. The City will hold the public hearing on February 22, 2022.
There is an attached capital improvement plan that describes in detail the need for this facility. It is
needed because the Hastings Economic Development and Redevelopment Authority (HEDRA) sold a
property (known as UBC-North) for redevelopment purposes, which had been used by the Public Works
department to store vehicles and equipment.
After the public hearing, if the City Council wishes, it can approve the attached capital improvement plan
for the new Public Works Storage Facility. If approved, the City will issue CIP Bonds to help finance the
$2,250,000 project. In April, the Council would determine the amount of the project to finance through
the CIP bonds and the amount to covers with cash on-hand.
Staff is asking the City Council to approve this capital improvement plan.
Financial Impact:
Future year bond payments
Advisory Commission Discussion:
N/A
Council Committee Discussion:
N/A
Attachments:
Five-Year Capital Improvement Plan for the City of Hastings
Resolution adopting capital improvement plan and preliminary approval for issuance of bonds
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2022 through 2026
Five-Year Capital Improvement Plan for the
City of Hastings, Minnesota
Draft for Public Hearing: February 22nd, 2022
Prepared by:
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CITY OF HASTINGS
FIVE-YEAR CAPITAL IMPROVEMENT PLAN
2022 THROUGH 2026
I. INTRODUCTION
In 2003, the Minnesota State Legislature adopted a statute that generally exempts city and town
general obligation bonds issued under a capital improvement plan from the referendum
requirements usually required for city halls, public works, public safety facilities and libraries.
The statute on general obligation capital improvement plan bonds is Minnesota Statutes,
Section 475.521 (the “Act”).
II. PURPOSE
Under the Act, a capital improvement is a major expenditure of City funds for the acquisition
or betterment to public lands, buildings, or other improvements used as a city hall, town hall,
library, public safety, or public works facility, which has a useful life of five years or more.
Under the Act, capital improvements do not include light rail transit or related activities, parks,
road/bridges, administrative buildings other than a city hall or town hall, or land for those
facilities. A Capital Improvement Plan (“CIP” or “Plan”) is a document designed to anticipate
capital improvement expenditures and schedule them over a five-year period so that they may
be purchased in the most efficient and cost-effective method possible. A CIP allows the
matching of expenditures with anticipated income. As potential expenditures are reviewed, the
City considers the benefits, costs, alternatives and impact on operating expenditures.
Before issuing bonds under a CIP, the City must hold a public hearing on the CIP and the
proposed bonds and must then approve the CIP and authorize the issuance of the bonds by a
majority of at least three-fifths.
If a petition signed by voters equal to at least 5% of the votes cast in the last general City
election requesting a vote on the issuance of bonds is received by the municipal clerk within
30 days after the public hearing, then the bonds may not be issued unless approved by the voters
at an election.
The statute has established certain criteria that must be considered for each project to be
undertaken pursuant to this Plan (the “Project”). These criteria are:
1. Condition of the City’s existing infrastructure and projected need for repair or replacement
2. Demand for the improvement
3. Cost of the improvement
4. Availability of public resources
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5. Level of overlapping debt
6. Cost/benefits of alternative uses of funds
7. Operating costs of the proposed improvements
8. Alternatives for providing services most efficiently through shared facilities with other
municipalities or local governments
The Plan is designed to be updated on an annual basis. In this manner, it becomes an ongoing
fiscal planning tool that continually anticipates future capital expenditures and funding sources.
III. PLAN SUMMARY
This Plan is intended to describe and analyze the need for the Project in accordance with the
Act. The City may modify this Plan from year to year as authorized by the Act.
Following is a summary of estimated expenditures for the Project:
2022 Expenditures
The City intends to construct a new Public Works Storage Building. Total project costs are
estimated to be $2,250,000
2023 Expenditures
None anticipated at this time.
2024 Expenditures
None anticipated at this time.
2025 Expenditures
None anticipated at this time.
2026 Expenditures
None anticipated at this time.
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Analysis
The City has analyzed the eight points required by the Act for the Project on an individual basis
and as a whole. The findings are as follows:
1. Conditions of City Infrastructure, Including the Projected Need for Repair or
Replacement and Need for the Project
The Hastings Economic Development and Redevelopment Authority (HEDRA) sold a
property (known as UBC-North) for redevelopment purposes. The property included
a cold storage building that accommodated 10,000 square feet in vehicle and equipment
storage for the City. An analysis was done to salvage components of the existing
structure and relocate them to the new site at the Public Work Building grounds, but
this was determined not to be cost effective. Additionally, the City’s growing storage
needs and building orientation relative to the space identified confirmed the need for a
new facility.
2. Likely Demand for the Project
The new facility will allow safe and secure storage of the materials, equipment, and
vehicles that need to be housed and protected from the elements. The storage building
is sized to be 140-feet wide and 80-feet deep (total of 11,200 square feet) to store the
necessary Public Works items and also accommodate 1,200 square feet of storage for
the Parks Department.
3. Estimated Cost of the Project
The estimated cost, including architectural/engineering, contingency, legal and bonding, of the
Project to be undertaken in 2022 (the only Project for which bond authorization is requested)
is $2,250,000. The improvements planned for any given year may be constructed and bonded
for in any other year of the CIP, as long as the total planned improvements and maximum
bonding authority do not change.
4. Available Public Resources
The City has cash reserves on hand to finance up to $1,000,000 of the Project but will need to
issue bonds for the remaining project costs. The City currently intends to issue bonds in an
amount not to exceed $1,250,000; however, this document has been drafted to allow the City
the authority to bond for up to the total project cost, estimated at $2,250,000.
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5. Level of Overlapping Debt in the City
As of August 2, 2021, the level of overlapping debt in the City is provided in the table below:
OVERLAPPING DEBT as of August 2, 2021:
Issuer
2020/2021
Tax
Capacity
Value(1)
2020/2021
Tax
Capacity
Value
in City(1)
Percentage
Applicable
in City
Outstanding
General
Obligation
Debt(2)
Taxpayers’
Share
of Debt
Washington County $ 363,058,143 $ 34,878 0.01% $113,905,000 $ 113,905
ISD No. 200, Hastings 41,188,056 26,696,035 64.81 54,112,524 35,070,326
Metropolitan Council 4,576,186,304 26,696,035 0.58 8,800,000 51,040
Metro Transit 3,662,962,426 26,696,035 0.73 217,685,000 1,589,101
Total Indirect Debt: $ 36,824,372
6. Relative Benefits and Costs of Alternative Uses of the Funds
The proposed Project could potentially be financed through the issuance of lease-revenue
bonds. However, both costs of issuance and overall debt service payments would be higher,
since lease-revenue bonds are not general obligation debt and are therefore not as attractive to
potential purchasers. The issuance of general obligation capital improvement plan bonds
represents the most cost-efficient way to finance the proposed Project.
7. Operating Costs of the Proposed Project
Operating costs are expected to be minimal with the proposed new building. The
building is proposed to be cold storage; therefore, no heating costs are proposed. Only
the necessary lighting will be included inside and outside of the building for visibility
and security purposes.
8. Alternatives for Providing Services Most Efficiently Through Shared Facilities with
Other Municipalities or Local Government Units
Partnering with other municipalities or local units of government is not a feasible
option. The City did inquire with neighboring municipalities to identify any excess
storage space and nothing was available now or within the foreseeable future. Locating
the Project outside of the City of Hastings (or off of the Public Works Building
grounds) would increase response and travel times and cause levels of service and
efficiencies to decrease
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IV. FINANCING THE CAPITAL IMPROVEMENT PLAN
The total amount of requested expenditures under the CIP is not-to-exceed $2,250,000. These
expenditures are to be funded, in part, by the sale of the City’s general obligation capital
improvement plan bonds in the maximum amount of $2,250,000. The City intends to use
reserve funds (cash) to pay project costs in excess of net bond proceeds. It is the City’s intent
to issue bonds in 2022 for the Project listed under the 2022 Expenditures. However, the
improvements planned for any given year may be constructed and bonded for in any other year
of the CIP, as long as the total planned improvements and maximum bonding authority do not
change.
In the financing of the CIP, two statutory limitations apply. Under Minnesota Statutes, Chapter
475, as amended, with few exceptions, a municipality cannot incur debt in excess of 3% of the
assessor’s Estimated Market Value (“EMV”) for the municipality. In the case of a municipality
with a population of 2,500 or less, the bonds are not subject to the net debt limits. The City’s
estimated 2021 population was 23,168. Therefore, the proposed general obligation capital
improvement plan bonds to be issued in the years 2022 through 2026 would be subject to the
debt limit. The City’s 2021 EMV is $2,236,862,500. 3% of EMV = $67,105,875. As of August
2, 2021, as reported in the Official Statement for the City’s 2021A Bonds, the City’s following
outstanding bond issues are applicable to the legal debt limit:
$1,715,000 General Obligation Public Facility Refunding Bonds, Series 2010A $ 180,000
$2,675,000 General Obligation Bonds, Series 2013B 280,000
$3,200,000 General Obligation Bonds, Series 2014A 290,000
$2,755,000 General Obligation Bonds, Series 2015A 1,110,000
$3,295,000 General Obligation Bonds, Series 2016A 1,395,000
$3,820,000 General Obligation Bonds, Series 2018A 815,000
Total Debt applicable to debt limit: $ 4,070,000
Another limitation on bonding under the Act is that without referendum, the total amount that
can be used for principal and interest in any one year for CIP debt cannot exceed 0.16% of the
EMV for the City. The maximum annual principal and interest for the City is $3,578,980 based
upon the City’s 2021 EMV ($2,236,862,500 x .0016).
Under this Plan, the City may issue up to $2,250,000 in general obligation capital improvement
plan bonds in the years 2022 through 2026 to finance the Project. The bonds are intended to be
structured with a not-to-exceed term of 10 years. Principal payments will begin on February 1,
2024. The principal and interest payments for the proposed bonds are estimated to be $115,000
in calendar years 2024 through 2033. This is estimated based on the estimated par amount of
$1.03 million of bonds to be issued pursuant to the CIP Plan.
Expected debt service on the proposed bonds for the Project to be financed in 2022 is within
the statutory limits.
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EXTRACT OF MINUTES OF MEETING
OF THE CITY COUNCIL OF THE
CITY OF HASTINGS, MINNESOTA
HELD: FEBRUARY 22, 2022
Pursuant to due call and notice thereof, a meeting of the City Council of the City of Hastings,
Minnesota, was duly called and held at the Hastings City Hall located at 101 4th Street East in the
City of Hastings, Minnesota, on Tuesday, the 22nd day of February, 2022, at 7:00 p.m.
The following members were present:
and the following were absent:
Council Member _____________ introduced the following resolution and moved its adoption:
CITY OF HASTINGS, MINNESOTA
RESOLUTION NO. _____
RESOLUTION ADOPTING A CAPITAL IMPROVEMENT
PLAN AND PROVIDING PRELIMINARY APPROVAL FOR
THE ISSUANCE OF BONDS THEREUNDER
WHEREAS, pursuant to Minnesota Statutes, Section 475.521 (the “Act”), cities are
authorized to adopt a capital improvement plan and carry out programs for the financing of capital
improvements; and
WHEREAS, the City of Hastings, Minnesota (the “City”), has caused to be prepared a Capital
Improvement Plan for the years 2022 through 2026 (the “Plan”); and
WHEREAS, on the date hereof, the City Council of the City (the “Council”) has conducted a
duly noticed public hearing regarding adoption of the Plan pursuant to the requirements of the Act
and the issuance of general obligation bonds thereunder in a maximum principal amount of
$2,250,000; and
WHEREAS, in considering the Plan, the Board has considered:
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1. the condition of the City’s existing infrastructure, including the projected
need for repair and replacement;
2. the likely demand for the improvement;
3. the estimated cost of the improvement;
4. the available public resources;
5. the level of overlapping debt in the City;
6. the relative benefits and costs of alternative uses of the funds;
7. operating costs of the proposed improvements; and
8. alternatives for providing services more efficiently through shared
facilities with other local government units.
BE IT RESOLVED by the City Council of the City of Hastings, Minnesota (the “City”), as
follows:
1. The Plan is hereby approved.
2. City staff are hereby authorized to do all other things and take all other actions as may be
necessary or appropriate to carry out the Plan in accordance with any applicable laws and
regulations.
3. The City gives preliminary approval to the issuance of the bonds in the maximum
principal amount of $2,250,000, provided that if a petition requesting a vote on issuance
of the bonds, signed by voters equal to five percent of the votes cast in the last general
municipal election, is filed with City Clerk by March 24, 2022, the City may issue the
bonds only after obtaining approval of a majority of voters voting on the question at an
election.
4. The City Council declares its official intent to reimburse itself for the costs of the capital
improvements from the proceeds of tax-exempt bonds in an amount not to exceed
$2,250,000.
The motion for the adoption of the foregoing resolution was duly seconded by Council
Member ________ and, upon a vote being taken thereon after full discussion thereof, the following
voted in favor thereof:
and the following voted against the same:
Whereupon said resolution was declared duly passed and adopted.
Adopted this 22nd day of February, 2022.
_________________________________
Mayor Mary Fasbender
____________________________________
Kelly Murtaugh, City Clerk
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STATE OF MINNESOTA
COUNTIES OF DAKOTA AND WASHINGTON
CITY OF HASTINGS
I, the undersigned, being the duly qualified and acting City Clerk of The City of Hastings,
Minnesota (the “City”), by reason of my office as City Clerk, DO HEREBY CERTIFY that I
have compared the attached and foregoing extract of minutes with the original thereof on file
in my office, and that the same is a full, true and complete transcript of the minutes of a
meeting of the City Council of the City of Hastings, Minnesota, duly called and held on the
date therein indicated, insofar as such minutes relate to approving Capital Improvement Plan
and providing preliminary approval for the issuance of bonds thereunder.
WITNESS my hand this ___ day of _______________, 2022.
__________________________________
Kelly Murtaugh, City Clerk
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