Item 3C: Resolution Authorizing the Sale of GO Bonds to Fix Streets

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Resolution 4958 Authorizing the Sale of General Obligation Bonds to Fix Streets and Off-Street Paths Meeting Date: December 8, 2008 Agenda Item Number: 3C Department: Central Services Staff Contact: Sue Cutsogeorge www.eugene-or.gov Contact Telephone Number: 682-5589 ISSUE STATEMENT The council is asked to authorize issuance of the $35,900,000 of General Obligation Bonds to fix streets and off-street bike and pedestrian paths approved by voters in the November 2008 election. BACKGROUND The City Council placed a $35,900,000 General Obligation Bond measure on the November 2008 ballot to fix streets and off-street bike and pedestrian paths. Voters approved the measure by a margin of 57% to 43%. Bond funds will be used to fix approximately 70 lane miles of specifically-identified streets and three miles of off-street bike and pedestrian paths. Staff has begun work with the City’s bond counsel and financial advisor to develop a plan for issuance of the bonds for these projects. The goals of the issuance plan are to: (1) ensure that the City has sufficient funds on hand when needed to accomplish the projects; (2) keep faith with the voters about the cost of the measure; (3) comply with all federal and state laws regarding issuance of municipal bonds, and (4) minimize the costs and staff time required to accomplish these goals. This bond measure is expected to be implemented in the same manner as the 2006 Parks, Athletic Fields and Open Space Bonds, and this resolution is essentially identical to the one presented to the council for that measure. Staff is continuing to work with City bond counsel and financial advisors to develop the issuance plan. The attached resolution would allow the City the flexibility to issue a line of credit or other allowable types of debt, and to issue taxable or tax-exempt debt, as appropriate to meet IRS tax laws and minimize the overall cost to the City. The resolution also allows the City Manager to issue debt as needed to fund projects, without further council authorization. In the materials presented to voters for the bond measure, it was estimated that the average tax rate over the life of the bonds would be about $0.61 per $1,000 of assessed value. In developing a bond issuance plan, staff will target an average tax rate at or near the level estimated in the bond measure materials. Assessed value growth is currently below what was assumed in the estimates developed this past spring, however, which could mean the rate will be slightly higher than expected next year. Oregon law does not require that the council take specific action to authorize spending authority for the proceeds of a General Obligation Bond issue if the proceeds are spent in the same fiscal year as the bond election. Therefore, staff does not intend to bring an FY09 supplemental budget to council for this item. The FY10 budget will include additional project spending appropriation. Z:\CMO\2008 Council Agendas\M081208\S0812083C.doc