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HomeMy WebLinkAboutCity Council Committees - Operations Committee - 04/05/2016 OPERATIONS COMMITTEE MINUTES April 5, 2016 Committee Members Present: Les Thomas; Bill Boyce; Dana Ralph, Chair The meeting was called to order by Dana Ralph at 4:02 p.m. 1. ROLL CALL. 2. CHANGES TO THE AGENDA. There were no changes to the agenda. 3. APPROVAL OF THE CHECK SUMMARY REPORT DATED 3/1/2016 THRU 3/15/2016. B. Boyce moved to approve the check summary report dated 3/1/16 through 3/15/16. L. Thomas seconded the motion, which passed 3-0. 4. APPROVAL OF MINUTES DATED MARCH 15, 2016. L. Thomas moved to approve the Operations Committee minutes dated March 15, 2016. B. Boyce seconded the motion, which passed 3-0. 5. DRUG FORFEITURE FUNDS – AMEND BUDGET AND AUTHORIZE EXPENDITURE - RECOMMEND. Police Assistant Chief Derek Kammerzell made a request to authorize funds in the amount of $175,000 to be used to support education, outreach, and enforcement of drug-related activities in the Kent community, including the efforts of Suburban King County Coordinating Council on Gangs (SKCCCG) through Youth LINC and grants supporting youth education. Youth LINC is a program managed by the SKCCCG and the Center for Children & Youth Justice (CCYJ). Through the Youth LINC Program, SKCCCG delivers direct services to referred gang-involved youth in Kent through its Intervention Team. Because of a number of questions asked, Committee members requested for this motion be tabled until the next committee meeting on April 19, 2016, when more detail can be provided. L. Thomas moved to table this motion until the next Operations Committee, April 19, 2016. B. Boyce seconded the motion, which passed 3-0. 6. ORDINANCE APPROVING 2015 INTERNAL FINANCING – 72ND AVENUE SOUTH IMPROVEMENTS PROJECT - RECOMMEND. Finance Director Aaron BeMiller requested that internal financing be brought before committee members for consideration; this request was initiated by the Public Works Committee. The estimated total cost for the project is $3,760,000. The funding for the project comes from four sources: Washington State Transportation Improvement Board Operations Committee Minutes April 5, 2016 Page: 2 grant ($1,182,420); Drainage District #1 matching contribution ($20,000); City matching contribution ($1,357,600), and the City of Kent Regional Fire Authority (RFA) ($1,200,000). Details of the interlocal agreement that the City and the RFA entered into are:  The RFA will remit to the City ten annual payments of $120,000.  It is necessary for the City to internally fund $1,000,000 of the project cost through an internal loan from the Sewerage Operating Fund.  The $1,000,000 internal loan will be financed over eight years and will include interest.  The annual payments of $120,000 from the RFA will be applied to pay down the outstanding internal debt.  Annual debt payments will be made by the Public Works Street Fund to the Sewerage. Unless modified by the City Council, the term of the internal financing shall not exceed eight years and the annual interest rate is to be the higher of 1.25 percent or the annualized interest rate earned on the investments in the Local Government Investment Pool. The interest rate will be reviewed at the end of each fiscal year and the debt service recalculated if necessary. L. Thomas moved to recommend adoption of Ordinance No. , approving an internal financing for the 72nd Avenue South Improvements Project in an amount not to exceed $1,000,000 and, to be repaid over an eight year repayment schedule. B. Boyce seconded the motion, which passed 3-0. 7. 2016 BOND REFUNDING - RECOMMEND. Mr. BeMiller and Bond Counsel Deanna Gregory from Pacifica Law Group LLP made a request to refund the City’s 2008A General Obligations bonds. Additionally, in participation with the City of Kent Public Facility District (PFD) and its Bond Counsel, Foster Pepper PLLC, the City and PFD are working jointly to refund the PFD’s 2008 sales tax bonds (Sales Tax Bonds). The City will be refunding the Sales Tax Bonds at the PFD Board’s request. This action will formally incorporate the Sales Tax Bonds onto the City’s books. In 2008, the PFD sold $63,280,000 in bonds - $10,130,000 of taxable revenue bonds and $53,150,000 in tax exempt Sales Tax Bonds. The City, with cooperation of the PFD, is refunding only the tax exempt Sales Tax Bonds. The taxable bonds are not impacted. When the PFD bonds were sold, the City and the PFD entered into a Contingent Loan and Support Agreement. That agreement will remain intact until final maturity (2020) of the taxable revenue bonds. Through the adoption of this ordinance, the City will approve a new Interlocal Financing Agreement between the City and the PFD. This agreement essentially duplicates the language in the current Contingent Loan and Support Agreement except that it reverses the flow of cash between the City and PFD. The new financing agreement ensures that the sales taxes collected by the PFD will be used to help pay for the debt service on the portion of the City’s bonds used to refund and Sales Tax Bonds. Operations Committee Minutes April 5, 2016 Page: 3 The refunding ordinance allows for the designated representative to approve the final refunding as long as the following conditions are met:  The aggregate principal amount of the Bonds does not exceed $80M, and  The final maturity date is no later than December 1, 2037, and  Each series of Bonds are sold in the aggregate at a price not less than 97 percent and not greater than 130 percent, and  Any Bonds sold for the purpose of refunding must result in a minimum net present value savings of at least 3.00 percent and,  The true interest cost for each series of Bonds, in the aggregate, does not exceed 4.00 percent and,  Any refunding must take place before December 31, 2016. Current estimates, as of February 2016, on the refundings are a net present value savings of $7,569,510 or 10.80 percent on the refunded bonds, and a true interest cost of 3.11 percent. The scheduled closing date on the refundings is June 2, 2016. B. Boyce moved to recommend council adopt Ordinance No. , providing for the issuance of one or more series of limited tax general obligation refunding bonds in an aggregate principal amount not to exceed $80,000,000, to refund certain outstanding city limited tax general obligation bonds, to refund certain outstanding sales tax bonds of the City of Kent Special Events Center Public Facilities District, and to pay costs of issuing the bonds; providing the form and terms of the bonds; and delegating the authority to approve the final terms of the bonds, subject to the approval of final terms by the city’s f inance director and city attorney. L. Thomas seconded the motion, which passed 3-0. 8. 2016 REFUNDING SAVINGS STRATEGY. Mr. BeMiller asked for a signal of intent to go forward with the potential bond refundings that were presented to Council during the February 2, 2016 Workshop. One of the discussion points during that Workshop was the possibilities for how the City will want to structure the savings from the refunding. The Finance Department is recommending that the savings from the 2016 refunding be structured to achieve maximum savings between 2020 and 2024 for the following reasons:  The City will lose the Panther Lake Sales Tax Credit in 2020; and  The City’s general obligation (GO) debt reduces significantly in 2025 and again in 2026; and  The only GO debt on our books beginning 2026 is the refunded bonds; and  The City will have an opportunity to refund these bonds again in 2026 or afterward if the market conditions are favorable (this would also be true if we use a uniform savings structure). Operations Committee Minutes April 5, 2016 Page: 4 The proposed modified savings structure will result in a reduced overall savings from the uniform structure, currently estimated to be $650,000 over the life of the bonds (final maturity date of 2037). The meeting was adjourned at 4:34 p.m. by D. Ralph. J. Hays Jennifer Hays Operations Committee Secretary