Title
An Ordinance Calling an Election to Authorize the Issuance of General Obligation Bonds for the City of Lee's Summit, Missouri, Related to Public Safety.
(Note: First reading by City Council on May 14, 2019. Passed by unanimous vote.)
Body
Issue/Request:
An Ordinance Calling an Election to Authorize the Issuance of General Obligation Bonds for the City of Lee's Summit, Missouri, Related to Public Safety
Key Issues:
City staff has prepared this ordinance and ballot language for the proposed public safety related "No Tax Increase" bond initiatives as identified by the Mayor and City Council for the August 6, 2019 special election. The Mayor and Council directed staff to prepare this ordinance with the initiatives noted below during the May 7, 2019 City Council consideration of the proposed bond initiatives. Initiatives within the attached ordinance/ballot question which total $19,475,000 have been reviewed and approved by the City's bond counsel and now include:
* New Fire Station #4 (land, building and fire apparatus) - $7,000,000
* New Fire Station #5 (land and building) - $5,000,000
* Police In-car video replacement system and Body worn cameras - $1,000,000
* Renovations and improvements to the Police & Courts facility - $5,500,000
* Fiber optic and wireless communications network to enhance communications and public safety - $975,000 (see additional detailed information provided below regarding relationship to public safety)
- City Hall is the hub of the City’s communications network, and connectivity between City Hall and Fire, Police and other facilities to maintain public safety is the primary motivation to undertake these communications improvements.
- Communication interconnectivity among the numerous City facilities (all types including City Hall, water facilities, public works facilities, fire, police, parks) is critical to a reliable communications network for public safety, both in terms of every- day public safety operations and in crisis situations resulting from serious weather events, natural disasters, fires, terrorism, public violence, shooting incidents and other life-threatening situations that require an immediate response and reliable communications.
- Much of the network communications improvements relate directly to the other items in the combined question, including (1) communications improvements to the new fire stations, (2) enhanced communications with the Police Station, and (3) improved wireless networked communications throughout the entire system to operate the new Police car video systems and body worn cameras.
- The Longview Recreation Center network improvements have a public safety component as the facility also serves as a storm shelter.
Proposed City Council Motion:
I move for adoption of an ordinance Calling an Election to Authorize the Issuance of General Obligation Bonds for the City of Lee's Summit, Missouri, Related to Public Safety.
Background:
On January 15, 2019 City staff provided the Mayor and City Council with a presentation regarding the City's debt issuance capacity. The Mayor and City Council directed City staff prepare a listing of potential No Tax Increase (NTI) bond projects that could be considered for an August 2019 NTI bond election to maintain the City's current tax levy. The Mayor and City Council directed staff to work with the Community and Economic Development Committee (CEDC) to develop a recommendation(s) to present to the Mayor and City Council for an August NTI election. City staff presented proposed projects & initiatives to the CEDC on March 13th and to the Mayor and Council at the April 9, 2019 Work Session as well as the May 7, 2019 Regular Session meetings. The Mayor and City Council directed staff to prepare ordinances for NTI bond initiatives related to public safety and curb replacement. The proposed ordinances and ballot language has been reviewed and approved by the City's bond counsel.
The City has strived to maintain a consistent tax levy for debt service since the late 1990s. The City's tax levy is currently $0.4697 per $100.00 assessed valuation. The residents and the City benefit from the level maintenance of the tax levy through the avoidance of expensive tax elections, stability of tax revenues for support of infrastructure improvements, and stable tax bills for residents. The City plans to continue coordinating its funding needs and debt issuance to correspond with that tax levy cap.
In order to maintain a level tax levy for debt service for Calendar Year 2020 and after, it is necessary to place a ballot issue before the voters in 2019. We need to increase debt service requirements by at least approximately $1.3 million based on a 3% annual increase in assessed valuation for Calendar Year 2020 alone to maintain the current debt service levy. The amount of debt service obligation required to maintain our current debt service levy is, in large part, based on changes in our assessed valuation. The examples below show the significant impact that changes in assessed valuation have on our debt service. As you can see, the decision on the size of debt obligation to issue is a moving target. It is also impacted by changes in interest rates. Further, we do not typically receive our final assessed valuation from Jackson and Cass Counties until late September so we have a narrow window of time from October 1 to December 31 to respond and issue bonds in the event of a large unexpected increase.
3% increase in assessed valuation for 2019, 2020, 2021=$1.3 million for 2020, $10.3 million cumulative spend through 2022
5% increase in assessed valuation for 2019, 2020, 2021=$1.7 million for 2020, $12.1 million cumulative spend through 2022
7% increase in assessed valuation for 2019, 2020, 2021=$2.1 million for 2020, $14 million cumulative spend through 2022
To make our debt levy target manageable, the ballot issue should include authorization for bond issuance large enough to provide accommodation for unpredictable changes in assessed valuation and interest rates. Once we have authorization from the voters, we can manage our financing needs and the structure of each bond issue to match up our debt service requirements to the levy thereby avoiding large swings in our debt service levy.
Staff has prepared informational project sheets and estimates for some of the recently discussed projects which are attached to this packet form as well as a spreadsheet summarizing the potential projects.
Voter approval of an amount in the range of $23 to $30 million should meet the financing needs and allow the flexibility needed to maintain the debt levy. The Mayor and City Council chose not to pursue the full estimated bonding capacity at this time as the Citizen Strategic Plan is underway, therefore leaving some capacity for future community needs which may be considered through a future No Tax Increase bond initiative. The deadline for entities to certify elections to the Election Authority for an August 6, 2019 Special Election is May 28, 2019.
Timeline:
Proposed schedule for NTI bond issue moving forward:
May 14, 2019 - Mayor and City Council consider 1st reading of ordinance calling for August 6, 2019 NTI bond issue election.
May 21, 2019 - Mayor and Council consider adoption of ordinance calling for August 6, 2019 NTI bond issue election.
Prior to May 28, 2019 - City Clerk certification to Election Authority
Presenter
Mark Dunning, Assistant City Manager
David Bushek, Chief Counsel of Economic Development & Planning
Bette Wordelman, Finance Director
Recommendation
Recommendation:
Staff recommends approval of this ordinance.