#3A Review of potential items & projects in 2009 note issue
ADMINISTRATIVE SERVICES MEMORANDUM
September 9, 2009
TO: City Council
FROM: Jacob J. Winzenz, Dir. of Admin. Services/Assistant City Manager
SUBJECT: Proposed 2009 Note Issue
Summary
Janesville has traditionally borrowed money through the issuance of Promissory
Notes in the late spring/early summer of each year to finance various capital
projects. While this year’s Note Issue is a little later than normal, staff is
proposing that we move forward at this time. The proposed 2009 Note Issue is
$14,180,000, which is approximately $1.1 million less than the 2008 Note Issue.
The General Fund portion of the proposed Note Issue is $6,740,000, or
approximately 47% of the total. Of the General Fund portion ($6,740,000) the
City Council has already approved and committed to fund projects totaling
$5,285,000, or 78% of the General Fund total. It is estimated that a General
Fund borrowing of $6,740,000 will increase the tax levy in 2010 by 1.53%. For
the owner of the average home assessed at $113,300, this equals an additional
$12.19 per year in property taxes.
Requested Action
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A study session is scheduled for Monday, September 14 from 5:00 until 7:00.
At this time staff will be available to answer questions regarding the proposed
Note Issue and any projects contained therein. Staff would like to receive input
from the City Council regarding the proposed Note Issue and any projects that
should be considered for addition or deletion.
Background
The base for the 2009 Note Issue was the Major Capital Projects budget included
as part of the City’s 2009 Annual Budget. The 2009 Major Capital Projects
budget anticipated total capital needs of $17,376,600. Of this amount, it was
anticipated that General Fund portion would be $6,436,600, or 37%.
Earlier this year division and department heads reviewed the proposed 2009
Major Capital Projects budget and were asked to revise projects as appropriate.
These revisions were then incorporated and presented to the City Council at their
retreat in June. At that time the General Fund portion of the borrowing was
estimated to be $8.3 million. This would have increased the tax levy by
approximately 2% and resulted in an annual tax increase of approximately $27
per year.
At the June retreat of the City Council several criteria for evaluating capital
projects were adopted. Staff evaluated the proposed capital projects against
these criteria. A summary of these ratings is attached as Exhibit V. These
ratings were considered in paring down the list of recommended projects.
Attached to this memorandum are six (6) exhibits. Exhibit I is a listing of all
outstanding debt as of December 31, 2008. As of December 31, 2008, a total of
$82,529,034 in general obligation debt was outstanding. Of this, $28,085,909, or
34%, is to be repaid by the General Fund. Exhibit II is a listing of the capital
projects recommended in this proposed Note Issue. Exhibit III is a listing of
projects not recommended for funding at this time. Exhibit IV is a narrative
description of all projects – both those recommended for funding and those not
recommended. Exhibit V is a summary of the project evaluation matrix
completed by staff. Exhibit VI presents the unexpended note proceeds. These
are previously borrowed funds that have yet to be expended. Most of these
projects are active and the funds have either been committed or will be expended
yet this year.
Analysis
The proposed 2009 Note Issue is consistent in amount with those of prior years.
The General Fund portion of the proposed Note Issue is $6,740,000. Of this
amount $5,285,000, or 78%, are for projects which the City Council has already
authorized and committed to fund. The single largest of these projects is the
Parker Drive Parking Structure at $2.9 million. This project alone represents
43% of the proposed General Fund borrowing.
A General Fund borrowing of $6,740,000 will have average annual debt service
of $802,060 and will cost the owner of the average home assessed at $113,300
approximately $26.12 per year for ten (10) years. However, the impact on the
2010 tax levy is less than that because some existing debt is being retired in
2009. Based upon the proposed borrowing, debt service is estimated to increase
$374,258, or 7.1%, in 2010. This will increase the property tax levy by 1.53%. In
2010 the owner of the average home assessed at $113,300 will pay an additional
$12.19 in property taxes for debt service.
Staff believes the proposed capital program balances the need to maintain and
enhance our capital assets with the need to minimize the impact on the property
taxpayer. Following City Council review of the proposed capital program during
the study session, staff will make any necessary revisions and follow the
traditional two-step process for the issuance of debt. On October 12, 2009, an
initial resolution will be scheduled for City Council review and action. Projects
may be added or deleted at this time. On October 26, 2009, the final resolution
will be scheduled for City Council review and action. Projects may be deleted at
this time, but projects may not be added. Finally, the award of sale of the
Promissory Notes will be scheduled for the meeting of November 2, 2009.
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