Parks Levy Stakeholder Committee Recommendations to Mercer Island City Council Revised May 9, 2008

Transcription

1 Parks Levy Stakeholder Committee Recommendations to Mercer Island City Council Revised May 9, 2008 The Parks Levy Stakeholder Committee which convened in December of 2007 recommends to the Mercer Island City Council that the following measures be presented to voters during the November 2008 General Election: 1. A permanent levy lid lift in the amount of $1.16 million annually to pay for: continuing operations and maintenance of Luther Burbank Park; school facility scheduling; school field maintenance; other school-related parks and recreation activities; open space/vegetation management; Pioneer Park forest management; and operations and maintenance for new park projects as listed below. 2. A 20-year bond levy in the amount of $14.71 million to pay for capital parks projects as listed below. Luther Burbank Park Operations & Maintenance Open Space/Vegetation Management Pioneer Park Forest Management Forest Steward Capital Projects Operations & Maintenance Total $369,423/yr $65,000/yr $77,223/yr $35,000/yr $155,000/yr $701,646/yr School Facility Scheduling $43,000 School Athletic Field Maintenance $120,000 Other School-Related Park & Recreation Activities $300,000 Total $463,000/yr Total Levy Lid Lift $1,164,646/yr Luther Burbank Shoreline restoration $4,113,117 South Mercer Playfields $3,586,700 Island Crest Park - Turf infields $988,423 Luther Burbank Waterfront Improvements $797,114 Luther Burbank Playground $438,413 Engstrom Open Space Trail $239,135 Small Dog Off Leash Area $318,846 Luther Burbank Swim Beach improvements $797,114 Luther Burbank North Wetland $797,114 Trail enhancements $326,818 Island Crest Park South Field Turf $717,404 Luther Burbank Trail Connections $797,114 Alt Funding- Swim Beaches $797,114 Capital Projects Total (Bond Levy)* $14,714,426 *Capital projects include project management and bond issuance costs, and are adjusted for inflation based on projected timing. Exhibit 6 Page 41

2 City of Mercer Island, Washington Capital and Operating Options May 19, 2008 Jean Baker (206) Annette Sommer (206) Exhibit 7 Page 42

3 FINANCING OPTIONS - BONDS Types of city general obligation bonds Voted Unlimited Tax General Obligation Bonds (UTGO) Non voted Limited Tax General Obligation Bonds (LTGO) Voter-approved bonds (UTGO) Repaid with property taxes Approved with a 60% yes vote, 40% validation 2.50% statutory debt capacity (2.50% for each purpose: general/utility purposes/parks, open space, economic development) Pros: New revenue source Payment flexibility (can select repayment term/structure, i.e. 10, 15, 20, 25 years etc.) Cons: 60% super majority and 40% validation required Non-voted bonds (LTGO) Repaid with existing revenue 1.50% statutory debt capacity Pros: No election requirement Payment flexibility (can select repayment term/structure, i.e. 10, 15, 20, 25 years etc.) Cons: No new revenue source 1 Exhibit 7 Page 43

4 OVERVIEW OF BONDS Voter-Approved Bond Debt Capacity VOTED DEBT CAPACITY ANALYSIS 2008 Bond Assessed Value $8,847,703,687 Statutory Capacity Rate 2.500% Total Statutory Capacity $221,192,592 Less: Outstanding Voted Debt ($370,000) Voter approved bonds (UTGO) repaid with property taxes approved with a 60% yes vote, 40% validation 2.50% debt capacity Less: Outstanding Non Voted Debt ($3,845,000) Remaining Capacity $216,977,592 Conclusion: Debt capacity is not a relevant constraint. Note: Excludes outstanding Public Works Trust Fund loans. City has 2.5% capacity for each purpose (general/utility/parks, open space, economic development). 2 Exhibit 7 Page 44

5 OVERVIEW OF BONDS Non-Voted Bond Debt Capacity NON VOTED DEBT CAPACITY 2008 Bond Assessed Value $8,847,703,687 Statutory Capacity Rate 1.500% Total Statutory Capacity $132,715,555 Non voted bonds (LTGO) repaid with existing revenue 1.50% debt capacity Less: Outstanding Non Voted Debt ($3,845,000) Remaining Capacity $128,870,555 Conclusion: Debt capacity is not a relevant constraint. Note: Excludes outstanding Public Works Trust Fund loans. 3 Exhibit 7 Page 45

6 ELECTION PLANNING Ideal Time Frame for Major Decisions Identify Bond and Levy Select Draft Election File Ballot Title Needs Issue Planning Election Date Ordinance with Co. ELECTION 6 MONTHS 6 MONTHS 4 MONTHS 2.5 MONTHS 52 DAYS (1) OR 84 DAYS (2) (1) Special elections (2) Primary or presidential election 4 Exhibit 7 Page 46

7 ELECTION DATES AND DEADLINES 5 Exhibit 7 Page 47

8 BOND SALE PROCESS Prepare for the bond sale (assumes competitive bid) SNW works with the City to structure debt service; review the plan with the council/staff. SNW prepares the official statement; City and bond counsel review documents. Bond counsel prepares the bond ordinance and legal opinion. The official statement is posted on I Deal and Notice of sale is printed in the Bond Buyer. Receive bids for the bonds Bids to buy bonds are solicited on specified date and time. SNW reviews bids with City staff. The Council meets to accept the highest bid and adopt the bond sale resolution. After the bond sale Bond counsel finalizes the closing documents. The official statement is finalized. Winning bidder wires money to the City upon bond closing approximately two weeks after pricing. Note: Once the bonds are approved by voters, the bond issuance process can generally be completed in 6-8 weeks. 6 Exhibit 7 Page 48

9 BOND SCHEDULE OF EVENTS (PRELIMINARY) 7 Exhibit 7 Page 49

10 FINANCING OPTIONS - LEVIES Lid Lift Requires simple majority Cannot exceed the $3.60/$1,000 maximum statutory dollar rate for the city. The City s 2008 regular levy rate is $1.036/$1,000 and the City s 2008 lid lift rate is $0.100/$1,000, resulting in a total 2008 tax rate of $1.136/$1,000. New base can apply for a limited or unlimited period unless paying debt service on bonds (which is limited to nine years). Cities can undertake consecutive lid lifts for up to six years, and can include an increase each year based on a limit factor (e.g. Consumer Price Index) Cities can undertake permanent lid lift, but would be limited to 1% yearly increase Pros: Simple majority of people Unlimited escalation possible with six year lift Cons: On going funding may require multiple lid lifts/elections Multiple year lid lift can only be presented to voters at a primary or general election If paying debt service on bonds, limited to nine years Permanent lid lift limited to 1% yearly increase Banked Capacity Banked capacity means dollar amounts not previously levied under the 106% and 101% limitations. Cities can bank up to the 101% limitation and levy the dollar amounts they previously banked up to the pre I % limitation. Pros: No election required Only source of operating funds not requiring a vote of the people Cons: Need to have adopted ordinance to bank capacity in past (which City has done) Limited future ability to bank capacity under I 747 One time funding source; banked capacity is a dollar amount, not a change to the property tax base 8 Exhibit 7 Page 50

11 Bond Planning Process The process of delivering education within the District is not a static function. The educational program changes and adapts in response to the changing conditions within the learning community of the District. These changes may require the District to modify its facilities (i.e., the location, design, etc.) and its educational program (i.e., school year, grade configuration, etc.). Changes should be made in consultation with the community and approved by the Board of Directors The Facilities Maintenance and Replacement Plan (FMRP) must be viewed as a work-inprogress that responds to the changing educational program and will assist in decisionmaking. The FMRP records and documents how the District utilizes its educational facilities given current District enrollment configurations, educational program standards and locations, fixed capital facilities, and known capital funding sources. Phase 1 Program Assessment Identify needs and provide justification of each need for current and future program expansion limited to areas scoped by the Superintendent. Committee membership to include Associate Superintendent of Instructional Services, Director of Student Services, Director of Curriculum and Staff Development, Director of Technology and building principals, in consultation with staff and parent representatives from each school. Coordinated by Kathy/Patty, Building Administrators Anticipated timeframe 8-12 weeks Phase 2 Demographic Analysis Current and future enrollment trends, construction patterns Coordinated by Liz Dodd Anticipated timeframe 6-8 weeks Phase 3 Expert Consultation Utilize the expertise of building principals, architects, engineers and construction professional to conduct a comprehensive assessment of district facilities, providing detailed and current information necessary to make informed recommendations regarding facility renovations. Coordinated by Liz LeRoy Anticipated timeframe: 4-5 months Phase 4 Bond Advisory Committee Review and evaluate information from consultants and prioritize into implementation plan, bond amount and formulate a recommendation to Board Throughout the bond committee process, members will hear from staff members about enrollment projections, the financial impact of a bond issue, needs of existing schools and facilities, among other topics. Committee membership to include Associate Superintendents; administrative and certificated staff representation from each site; parent representation determined by Principal along with Parent Advisory Committee s; At-Large community members to be selected by Superintendent s Cabinet. Coordinated by Liz and Kathy Anticipated timeframe 6-8 months

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14 Proposed MI Parks Ballot Measure Capital and O&M Funding Analysis Capital Funding Assumptions $12,129,800 capital projects total cost in 2008 dollars (including bond issuance costs) Capital projects will take 9 years to complete; expenditures (plus inflation) will be evenly spread over 9 year period 4% annual inflation 98% property tax collection rate 3 separate bond issues required due to arbitrage restrictions 4.75% interest rate for G.O. bonds issued in Dec 2008; 5.25% interest rate for G.O. bonds issued in Dec 2011 or later Capital Funding Options Option 1 Option 2 Option 3 Option 4 Pay As You Go G.O. Bonds / Notes G.O. Bonds G.O. Bonds (No Debt) (3 Final Maturities) (3 Final Maturities) (Same Final Maturity) Financing Mechanism Levy Lid Lift Levy Lid Lift Bond Levy Bond Levy Term 20 yrs Dec 2008 issue: 3 yrs Dec 2008 issue: 20 yrs Dec 2008 issue: 20 yrs Dec 2011 issue: 3 yrs Dec 2011 issue: 20 yrs Dec 2011 issue: 17 yrs Dec 2014 issue: 3 yrs Dec 2014 issue: 20 yrs Dec 2014 issue: 14 yrs Final Year of Levy and/or Debt Service Total Principal None $14,545,000 $14,545,000 $14,545,000 Total Interest None $1,007,000 $8,155,000 $5,189,000 Total Debt Service None $15,552,000 $22,700,000 $19,734,000 Average Annual Levy $ $926,712 $1,728,000 $873,077 $986,700 Total Levy $ $18,534,240 $15,552,000 $22,700,000 $19,734,000 (collected over 20 yrs) (collected over 9 yrs) (collected over 26 yrs) (collected over 20 yrs) Annual Property Tax Impact on $1.0M Home Total Property Tax Impact on $1.0M Home $ $ $ $ $2, $1, $2, $2, (paid over 20 yrs) (paid over 9 yrs) (paid over 26 yrs) (paid over 20 yrs)

15 Proposed MI Parks Ballot Measure Capital and O&M Funding Analysis O&M Funding Assumptions $1,164,646 annual O&M cost in 2008 dollars Includes replacement O&M funding for Luther Burbank Park levy (which expires at end of 2009) Permanent levy lid lift is only viable funding option Ignored ramp up of O&M costs to $1,164,646 as capital projects are completed Annual property tax impact via levy lid lift on $1.0M home = $ Total Annual Property Tax Impact on $1.0M Home Option 1 Option 2 Option 3 Option 4 Pay As You Go G.O. Bonds / Notes G.O. Bonds G.O. Bonds (No Debt) (3 Final Maturities) (3 Final Maturities) (Same Final Maturity) Annual Capital Levy $ $ $ $ $ Annual O&M Levy $ $ $ $ $ Total Annual Levy $ $ $ $ $ Less MIDA Levy Lid Lift ($53.68) ($53.68) ($53.68) ($53.68) Less LB Levy Lid Lift ($59.39) ($59.39) ($59.39) ($59.39) Net Annual Levy $ $ $ $ $158.64

16 City of Mercer Island, Washington Capital and Operating Options Summary May 19, 2008 Jean Baker (206) Annette Sommer (206)

17 CAPITAL FINANCING OPTIONS Option Vote Required Election Requirement Repayment Source Funding Voted Bond (20 Yr) Yes Super-majority (60%) Additional property taxes Bond sale Capital Levy (20 Yr) Yes Simple-majority (50% + 1) Additional property taxes Pay-as-you-go Non-Voted Bond (20 Yr) No N/A Current tax revenues (i.e. no new taxes Bond sale 1

18 MAINTENANCE AND OPERATIONS FINANCING OPTIONS Lid Lift The effect of a levy lid lift is to increase the Cityʹs tax levy base for the purposes of the 101% level lid in future years (i.e. would allow the City to levy an amount approved by its voters up to the applicable statutory rate limitations). Requires simple majority of people Cannot exceed the $3.60/$1,000 maximum statutory dollar rate for the city. The City s 2008 regular levy rate is $1.036/$1,000 and the City s 2008 lid lift rate is $0.100/$1,000, resulting in a total 2008 tax rate of $1.136/$1,000. New base can apply for a limited or unlimited period unless paying debt service on bonds (which is limited to nine years). Type of Lid Lift Six-year Levy Permanent Levy Vote Required Every six years Once Escalation Unlimited; must be stated on ballot Limited to 1.0% 2