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HomeMy WebLinkAboutItem C: PROS General Obligation Bond ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Work Session: Parks, Recreation and Open Space General Obligation Bond Meeting Date: February 13, 2006 Agenda Item Number: C Department: Public Works Staff Contact: Carolyn Weiss www.eugene-or.gov Contact Telephone Number: 682-4909 ISSUE STATEMENT At the November 16, 2005, City Council work session, the council directed the City Manager to bring back project ideas for a potential parks bond focused on time-sensitive items and projects with low operations and maintenance costs. The purpose of this work session is to provide the requested information. Should the council decide a Parks Recreation and Open Space General Obligation (G.O.) bond measure is to be placed on the November 2006 ballot, a decision on the amount of that bond is needed. BACKGROUND In 1998, Eugene voters approved a 25.3 million dollar G.O. bond with a 66% approval margin. Implementation of the bond funded projects is nearing completion, with just a few projects remaining which are scheduled for construction in 2006. Results of the bond implementation have met or exceeded expectations in all project categories. Additionally, a revised Parks, Recreation, and Open Space Comprehensive Plan is nearing completion following an extensive three-year planning process. In response to the council’s request, staff developed a potential project list consisting of three tiers. Attachment A identifies the projects included in the three tiers, including project descriptions, estimated project costs, and estimated maintenance costs. The three tiers are based on project spending amounts, including: ?$20 million package (Tier 1) ?$35 million package (Tier 2) ?$50 million package (Tier 3) The three tiers are cumulative, in that the 20 million dollar tier is also the basis of the 35 million dollar tier, and the 20 and 35 million dollar tiers are the basis of the 50 million dollar tier. All three tiers are comprised of projects which adhere to the criteria of timeliness, low maintenance and operations costs, or both. The mix of projects within each tier also provides services to all geographic areas of Eugene and includes a diversity of projects which would garner support from different interest groups throughout the city. The financial implications of the three bond measure proposals are set out in Attachment B. The size of the bond measure would include not only the project costs, but also the costs for issuing debt. The three options would range from $20.41 million to $50.97 million. The estimated cost to the median L:\CMO\2006 Council Agendas\M060213\S060213C.doc homeowner in the first year (FY08) would range from $35 to $89, while the average cost over the 20- year repayment would range from $20 to $53. The City could undertake any of the three options and remain with the debt policy limit of 1.0% of real market value. Under the largest of the bond measure options, however, the issuance of the bonds would have to be staged over a number of years to ensure compliance with the policy limits. If the council decides to move forward with a parks bond in 2006, there is a tentative date on the April 10, 2006, consent calendar to place the measure on the ballot. Timing implications include providing advocacy groups time to develop and make preparations for a political action committee. RELATED CITY POLICIES Adoption of the PROS Comprehensive Plan by City Council Resolution is scheduled for February 13, 2006. COUNCIL OPTIONS A.The council may provide direction to not prepare further for a Parks, Recreation, and Open Space Bond Measure in 2006, and to take the necessary actions to prepare for such a measure in 2008. B.The council may provide direction to move forward with preparations of a PROS bond measure in 2006, and indicate a dollar amount. C.The council may decide not to move forward with a PROS bond measure at this time. CITY MANAGER’S RECOMMENDATION The City Manager recommends Option A, to not prepare further for a Parks, Recreation, and Open Space Bond Measure in 2006, and to take the necessary actions to prepare for such a measure in 2008. SUGGESTED MOTION Move to direct the City Manager to not prepare further for a Parks, Recreation, and Open Space Bond Measure in 2006 and to take the necessary actions to prepare for such a measure in 2008. ATTACHMENTS A. Potential Bond Scenarios B. Financial Implications FOR MORE INFORMATION Staff Contact: Carolyn Weiss Telephone: 682-4909 Staff E-Mail: carolyn.j.weiss@ci.eugene.or.us L:\CMO\2006 Council Agendas\M060213\S060213C.doc Potential Bond ScenariosAttachment A February 13, 2006 project descriptionannual maint. costsproject costs ACQUIRE LAND FOR FUTURE PARKS$19,000$7,000,000 Neighborhood Park Sites: 2- Bethel 2- River Road/ Santa Clara 1- South Eugene 1- Willakenzie 2- Willow Creek Community Park Sites: Santa Clara Community Park Skinner Butte Access ACQUIRE NATURAL AREA PARKS$26,000$3,000,000 Ridgeline Trail- 40 acres River Frontage- 20 acres RENOVATE EXISTING PARKS$15,000$7,535,000 Playground Renovations (including safety and accessibility upgrades): Amazon Park Bond Lane Park Charnel Mulligan Park Friendly Park Lafferty Park Lincoln School Park Maurie Jacob's Park TIER 1 Sladden Park State Stree Park Willakenzie School Convert Wading Pools to Spray Play (per Health Department regulations): Monroe Sladden State Street University Washington Trail Renovations: Ridgeline Trail Running Trails Recreation Facility Renovations: Hult Center Renovations Echo Hollow Pool Solar Water Heat System Sheldon Pool Improvements Park Restrooms PARTNERSHIP OPPORTUNITIES$20,000$2,465,000 Wetland Education Center School Sportsfield Upgrades TIER 1 TOTAL$80,000$20,000,000 ACQUIRE LAND FOR FUTURE PARKS$7,000$3,500,000 Neighborhood Park Sites: 2- Bethel 1- River Road/ Santa Clara 1- Willakenzie 1- Willow Creek Community Park Sites: Amazon Park Inholdings ACQUIRE NATURAL AREA PARKS$39,000$4,750,000 Ridgeline Trail- 60 acres River Frontage- 25 acres Natural Area Access RENOVATE EXISTING PARKS$0$5,350,000 Trail renovations: Ridgeline Trail River Front: TIER 2 Skinner Butte Bank Stabilization Recreation Facility Renovations: Hult Center Renovations Tennis Court Rehabilitation Echo Hollow Pool Cover NEIGHBORHOOD PARK IMPROVEMENTS$6,000$400,000 Water Spray Playgrounds: Ascot Park Bethel Community Park River Road/ Santa Clara PARTNERSHIP OPPORTUNITIES$0$1,000,000 Sportsfields: School field upgrades TIER 2 TOTAL$132,000$35,000,000 ACQUIRE NATURAL AREA PARKS$45,000$5,100,000 Ridgeline Trail- 100 acres River Frontage- 20 acres Royal Node Natural Area IMPROVE ACCESS TO PARKS$5,000$1,600,000 Pedestrian Improvements: River Road to Bethel River Road to Santa Clara via Beltline Bethel Parks to Wetlands Amazon Park Bridge Park Signage: Park Entry and Directional Signs Accessibility Improvements: Americans with Disability Act Compliance Plan RENOVATE EXISTING PARKS$80,000$6,700,000 Neighborhood Parks: State Street Park Renovation TIER 3 Bond Lane Park Community Parks: Alton Baker Park Canoe Canal Restoration and Water Park Alton Baker Park General Park Renovation Recreation Facility Improvements: Echo Hollow Pool Improvements River House Phase 2 Expansion DEVELOP NEW PARKS$30,000$1,600,000 Neighborhood Parks: Terra Linda Rosetta Place Community Parks: City Central Skatepark Razor Park Plan Implementation Bethel dog park and running trail TIER 3 TOTAL$292,000$50,000,000 ATTACHMENT B G.O. Bond Measure Options for Parks, Recreation and Open Space Projects Bond Amounts Three options are presented for a General Obligation (“G.O.”) bond measure to be placed on the November 2006 ballot. The three options are for project spending of $20 million, $35 million or $50 million. In addition to the project spending, the bond measure must include a provision for the costs of issuing the bonds, such as obtaining a bond rating from Moody’s, obtaining a legal opinion from bond counsel, working with a financial advisor, publishing the necessary bond documents, etc. The three proposed bond measure sizes are: Option A Option B Option C Project Spending $20,000,000 $35,000,000 $50,000,000 Bond Issuance Costs 410,000 690,000 970,000 Total Bond Size $20,410,000 $35,690,000 $50,970,000 Impact on Taxpayers Assuming that voters approve a G.O. bond request in November 2006, the first impact on tax bills would occur in FY08. The chart below sets out the impact on taxpayers if the entire bond amount were issued immediately following the positive election results. Bond Bond Amount First-Year Cost in FY08 Average Annual Cost Option from FY08 to FY27 Tax Rate Cost to Tax Rate Per Cost to Median Per $1000 AV Median Home $1000 AV Home A $20,410,000 $0.24 $35 $0.11 $20 B $35,690,000 $0.43 $63 $0.20 $37 C $50,970,000 $0.61 $89 $0.29 $53 The chart sets out both the first year tax rate and the estimated rate over the 20 year repayment schedule for the bonds. The repayment schedule assumes that the principal payments are equal each year, which results in declining overall payments each year. This means that the cost to the taxpayer decreases each year, as assessed value in the City increases. Therefore, the average cost to the taxpayer over the life of the bonds is lower than the first-year cost. It should be pointed out, however, that it is likely that any PROS bond measure debt would be sold in more than one piece over several years, as the City did with the last parks and open space bonds. The impact on taxpayers would be different than what is shown above, depending on how much is issued and when it is issued. The chart above sets out the maximum anticipated payment in any year (the FY08 estimate) and the average over time. Specific analysis of bond amounts and timing cannot be undertaken until there is a final project list with the expected timing of the spending for each project. Impact on Debt Policy Limits The Budget Committee approved revised debt policies in February 2005. At that time, the Committee approved a debt policy limit that states that net direct debt as a percentage of real market value shall be a maximum of 1.0%. The most recent update of the Debt Capacity Analysis was also prepared as of February 2005, with projections of net direct debt outstanding from FY06 through FY11. At that time, it was projected that the City could issue $30 million for PROS projects in FY07 and $70 million for the City Hall replacement project in FY09 within the debt policy limits. Net direct debt outstanding under that scenario would peak in FY09 at 0.9%. Issuance of approximately $30 million of PROS bonds (or less) within the next six years would, therefore, be consistent with the debt policies. Issuance of the higher amount (Option C for $50 million) over the next six years would potentially constrain the amount of debt capacity that might be needed for City Hall. It is possible, however, to approve a $50 million bond measure, but to only issue the debt when it would result in the City’s net direct debt amount outstanding remaining under the 1.0% of real market value limit. In the February 2005 Debt Capacity Study, for instance, that by FY11, there would be additional debt capacity of about $43 million, even after issuance of $30 million of PROS bonds and $70 million of City Hall bonds. That additional capacity would be created from two factors: (1) growth in real market value; and (2) retirements of existing debt.