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<br /> <br /> <br /> <br /> <br />CITY COUNCIL COMMUNICATION <br /> <br />CITY COUNCIL COMMUNICATION <br />AGENDA ITEM III <br />SUBJECT: DISCUSSION – FINANCING/BONDING OPTIONS TO ADVANCE <br />CAPITAL IMPROVEMENTS <br /> <br />DATE: JANUARY 29, 2013 <br /> <br />PRESENTED BY: MALCOLM FLEMING, CITY MANAGER <br />KEVIN WATSON, FINANCE DIRECTOR <br /> <br />SUMMARY: <br />City Council asked staff to provide information on financing options should City Council <br />like to advance a number of capital projects. This topic was also discussed at the joint <br />meeting with Boulder City Council, as the City of Boulder approved a ballot question in <br />November of 2011 to address the City’s growing list of unfunded capital needs. For <br />2011, this included funding a bonding package that did not raise taxes and funded a <br />balance of significant deficiencies to address maintenance and renovation of existing <br />facilities as well as high priority facility enhancements. Based on existing revenues, the <br />City of Boulder had the capacity to bond for $55 million from General Fund revenues. <br />After an extensive public process, the bond package that went to the voters totaled $49 <br />million in projects, used existing revenues to repay the bonds, and asked voters for <br />bonding authority based on those existing revenues. <br /> <br />The City Council could consider using existing General Fund and Capital Fund dollars <br />and bonding against those revenues to pay for projects up front. However that would <br />limit resources in later years as funds would be dedicated to paying the annual debt <br />service. Assuming revenues remain fairly static, capital projects would be limited <br />without an additional revenue source. For example, per the chart below under Fiscal <br />Impact, if Council wants to do $10 million in capital projects, it would be necessary to <br />reduce the otherwise available Capital and/or General Fund budget(s) by $626,000 <br />annually. Increments of an additional $5 million are listed below to the maximum <br />suggested of $30 million in debt, which would reduce the otherwise available Capital <br />and/or General Fund by $1,879,000 annually. Using existing General and/or Capital <br />Funds would still require a vote of Louisville’s registered voters. If bonding is used, <br />projects would need to begin construction very soon after the bonds are issued. This <br />would require extensive staff work—perhaps necessitating additional staff, preliminary <br />design work and a prioritization process for those potential projects to be funded. <br /> <br />Should City Council desire to raise additional revenues, the City could pursue General <br />Obligation bonds. This also would require a vote of Louisville’s voters. This could be <br />done by proposing to increase the sales tax, which is currently at 3.5% for the City <br />(8.3% total). Sales tax rates of neighboring cities are attached, as a comparison. The <br />necessary sales tax rate (in addition to the current rate) to provide a range of $10 million <br />to $30 million in projects is listed in the Fiscal Impact section below. <br /> <br />19