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Home My WebLink About06/10/2008 09 Debt Financing Report RE: 2008 Engineering Street/Traffic Projects and New Fire Department Ladder Truck . . 0 BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. For Meeting of June 10, 2008 ITEM TITLE: Staff report regarding proposed debt financing for 2008 engineering street / traffic projects and financing for a new Fire Department ladder truck. • SUBMITTED BY: Dick Zais, City Manager - Bill Cook, Director of Community and Economic Development Charlie Hines, Fire Chief Rita DeBord, Finance Direct CONTACT PERSON /TELEPHONE: Brett Sheffield, Chief Engineer - 576 -6797 Rita DeBord, Finance Director - 575 -6070 SUMMARY EXPLANATION: I. Engineering Streets / Traffic projects: The approved 2008 budget included the issuance of a $2,050,000 bond for the design and • construction of four capital improvement projects: (1 3 Avenue Grind and Overlay - Chestnut Avenue to Mead Avenue; (2) Summitview Avenue and 66 Avenue Traffic Signal; (3) 16 Avenue and Bonnie Doone Pedestrian Crossing Signal; and, (4) Martin Luther King, Jr. Boulevard and 4 Street Pedestrian Crossing Signal. (Refer to the attached chart titled, "Projects Proposed for 2008 LTGO Bond" for more information on the 2008 budgeted projects.) The two pedestrian crossing signal locations listed above are the highest rated priorities for pedestrian signals due to the traffic and pedestrian volume data that was used to rate projects. Given the limited resources available during the 2008 budget process, only the highest two ranking sites were funded. (Continued on page two) Resolution Ordinance Other (Specify) Report Contract Mail to (name and address): Funding Source APPROVED FOR SUBMITTAL: '<..... Ci ' Ma.. ter STAFF RECOMMENDATION: Approve Report and direct staff to proceed with projects and debt financings as proposed herein. BOARD /COMMISSION RECOMMENDATION: (1) The Council Public Safety Committee approved the proposed changes to planned financing of the Fire Department's ladder truck. ill (2) The Council Downtown Yakima Futures Initiative Oversight Committee recommended the alternative financing plan for the pedestrian crossing signal at 16 Ave. / Hathaway. COUNCIL ACTION: ,` At Council's request, and the City Manager's direction, staff has continued to research options for funding additional pedestrian crossings and we are pleased to announce that we. have identified resources - from both internal and external sources - that could be utilized to fund two additional pedestrian crossings, should City Council so direct. These two additional locations are: 1 St and "N" St, which ranks #3 on the list of priority projects, and 16 Ave and Hathaway location, which ranks #4. The City's ability to fund the 16 Ave / Hathaway pedestrian crossing project is largely due to the support and cooperation received from the Department of Social and Health Services (DSHS). Members of City Council and the City Manager, Dick Zais, contacted the Department of Social and Health Services, which is located very near 16 Avenue and Hathaway Street, and requested their participation and support in funding the pedestrian crossing signal, since many of their employees and clients cross the busy street at this location. DSHS was very supportive of this project and after their own internal funding research and budget adjustments, they have committed to contributing $120,000 for this project. Staff proposes that the remaining funds to construct these two pedestrian crossing signals come from REET 1 Cash Reserves ($150,000) and increasing the 2008 LTGO Bond by $130,000.. 11. Fire Department Ladder Truck: The Fire Department needs to replace the ladder truck currently assigned to Fire Station #91 (401 No. Front Street),, which has reached the end of its useful service life. It is currently out of service approximately 30% of the time due to various mechanical breakdowns. A dependable ladder truck is critical to our mission; not having one would likely degrade the City's WSRB rating - resulting in increased insurance premiums. In addition to the engineering / streets projects noted above, Council approved the purchase of this new ladder truck for the Fire Department in the 2008 budget at an anticipated cost of approximately $1 million. At that time, staff anticipated utilizing $250,000 in cash reserves (from the Fire Capital Fund) and issuing debt for $750,000; utilizing REET 1 revenues to pay the debt service on the borrowing. However, after further study staff determined that REET 1 revenues are not eligible for this purpose. Therefore, a re- allocation of revenues was necessary to maintain compliance with regulations governing the use of these revenues. Staff proposes to finance the purchase of the fire ladder truck by utilizing $250K of cash reserves ($150K from general fund reserves and $100K from the Fire Capital Fund reserves) with the balance paid from proceeds of a general obligation bond. Debt service on a 15 year, $750K, LTGO bond, using recent interest rate assumptions, is estimated to be approximately $75K annually. Note: in 2007, the City issued 15 year, LTGO bonds to help fund the expansion of the West Valley Fire Station. The debt service on these bonds is approximately $75,000 annually and is paid from the City's annual property tax levies. Staff proposes to shift these property tax revenues and re- allocate them to pay the debt service on the 2008 ladder truck bond and utilize the REET 1 revenues to pay the debt service on the 2007 Fire Station expansion. This funding reallocation will maintain compliance with regulations on the use of the property tax and REET 1 revenues and, essentially, utilizes the same funding sources and in similar amounts as originally planned. • Page2of3 . Summary: The proposed 2008 LTGO Bonds would be increased to produce a total of $2,930,000 in bond proceeds. The attached chart titled "Projects Proposed for 2008 LTGO Bonds" outlines the proposed make -up of the 2008 LTGO bonds, including the total estimated costs for each project and staff's funding proposals for each project, for Council's review. Note: (1) Depending on the cash flow needs of these projects and the timing of the bond issue, some temporary bridge financing may be necessary. This will be determined as we further develop the bond issue schedule. Should bridge financing be necessary, this will be brought to Council for approval before proceeding. (2) If Council approves the projects and funding plan as proposed herein, an appropriation of $550,000 ($400,000 for the two additional pedestrian crossing projects and $150,000 for use of general fund reserves for the fire ladder truck) will be needed to authorize these budget expenditures. If Council approves these projects, these appropriations will be prepared and submitted to Council in the near future. • 110 Page 3 of 3 • ATTACHMENT P Projects Proposed for 2008 LTGO Bonds • Project Funding z Projects - Project Cost Bonds Other Grind Overlay (3rd.Ave., Mead - Chestnut) $1.4M • $1.4M Signal 66th Ave / Summitview j $350K $350K Pedestrian Crossings: 4th St & M.L. King Jr. Blvd. $150K $150K Pedestrian Crossings: 16th Ave & Bonnie Doone $150K $150K (1) Sub -total (2008 LTGO Bond as approved in 2008 budget) $2.050M $2.050M (2) Pedestrian Crossings: 1st St & "N" St $150K -- I $150K (3) Pedestrian Crossings: 16th Ave & Hathaway $250K $130K $120K (4) Fire Ladder Truck I $1.0M $750K $250K Total $3.450M $2.930M $520K • Legend: ( Proposed 12 yr. Bond for $2,050,000; Debt service: 2008 est. $50K; 2009 and thereafter est. $250K; paid 50 / 50 from REET 1 & 2 revenues. (Note: based on current market conditions, debt service is anticipated to be somewhat less than this amount; however, staff prefers to be very conservative in making market assumptions this far in advance of a debt issue.) ( Pedestrian crossing at 1st Street & 'N' St to be fully funded from REET 1 reserves. (A budget appropriation will be required should Council approve this project.) ( Proposed pedestrian crossing signal at 16th Ave. & Hathaway - to be funded by a contribution of $120K from DSHS and $130K from proceeds of the 2008 LTGO bonds. Staff anticipates that adding an additional $130K to the previously authorized $2,050,000 bond will not significantly impact the previous debt service cost estimates due to the fact that these are preliminary estimates which are very conservative and allow for some market fluctuations and minor changes in debt proceed requirements. (Refer to debt service funding outlined in footnote (1), above for more information. Note: A budget appropriation will be required should Council approve this project.) ( Fire Ladder Truck to be partially funded by $250K from (Non -Reet 1) cash reserves ($100K - Fire Capital Fund and $150K from general fund reserves). The $750K balance to be funded by a 15 yr. LTGO bond; debt service will be approx. $75K annually and will be paid from property tax funds which were previously dedicated to pay debt service on the bonds issued to expand the W.V. Fire Station. (REET 1 funds will be used to pay the debt service on the Fire Station bonds.) Note: A budget appropriation of $150k from the General Fund will be required should Council approve this project. 06 -10 -08 LTGO Proposed Projects and funding.xls 6/5/2008