City Council Minutes 2003 01 21 - Laserfiche WebLink

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Louisville City Council Meeting January 21, 2003 Page 11 Laus stressed there is an application process and a possibility that it may be denied. Brown asked why this issuance of new debt would not fall under Tabor tax law. Laus stated that enterprise funds are exempt from Tabor law because they function as a business and have the ability to raise rates to cover costs. City Attorney Light explained the Tabor tax language does not apply to enterprise funds. Laus stated the bonds would be revenue bonds and not general obligation bonds. The revenues derived from the enterprise fund would back the revenue bonds. Van Pelt asked for clarification that the agreement for purchase, which totals $1.9 million dollars would be taken out of the City's current appropriation, and not be a part of the debt financing. Laus stated there is an option that could be written into the agreement for the bond to pay back the $1.9 million dollars, if Council chooses to do so. Davidson addressed the 1-mill rebate for Northern Colorado Water Conservancy District and stated he would be in favor of discontinuing the rebate and making that money available to finance additional bonds. He also addressed the water rates, and proposed a 10% increase to pay off bonds. Laus noted the projections are based on water restrictions remaining in place. If watering restriction were to discontinue the water revenues would drastically increase. She reviewed the revenue projections for the 1-mill NCWCD rebate and a 10% water rate increase. City Manager Simmons asked about the minimum fund balance. Laus explained the rate coverage is based on current year revenues and current year expenditures. The beginning fund cash balances cannot be used to calculate the ratios for rate coverage for revenue bonds. Sisk suggested a two-tier approach and voiced his preference to eliminate the 1-mill rebate first and if necessary, consider a 10% water rate increase at a later time. Davidson stressed that approach would reduce the City's ability to purchase a larger amount of revenue bonds. He explained 1998 was the longest wet cycle, and a long wet cycle is followed by a long dry cycle, and the supply maybe be greatly reduced. He asked Laus what a 10% increase would be for a typical residential account. Laus stated a 10% increase in a residential account would be $25.29 per year. Brown voiced concern if bonds are issued twice the cost for bonds issuance would have to be paid twice. Laus confirmed each bond issuance requires an issuance cost. Van Pelt asked if the model was based on the assumption the City would go through the Authority to issue the bonds. Laus confirmed it was. 11