Title
A RESOLUTION DECLARING IT NECESSARY TO CONSTRUCT IMPROVEMENTS TO EXISTING ROADS IN SEDGWICK COUNTY, KANSAS, PROVIDING FOR THE ISSUANCE OF GENERAL OBLIGATION BONDS TO PAY THE COSTS THEREOF; AND PROVIDING FOR PUBLICATION OF THIS RESOLUTION AS REQUIRED BY LAW. (2012 ROADS).
Presented by: Chris Chronis, CFO.
RECOMMENDED ACTION: Adopt the resolution.
Body
The Resolution declares an intent to make road improvements, provides for the issuance of general obligation bonds of the County to pay the costs thereof and authorizes the required publications, as follows:
Reconstruct 71st Street South from 135th Street West to West K-42 Highway and 183rd Street West from 71st Street S. to K-42 Highway, by reconditioning the roadbed and constructing to two-lane rural standards, in accordance with plans and specifications developed or approved by Sedgwick County Public Works.
This project is included in the adopted CIP, payable in the aggregate from County general obligation bonds ($4,000,000).
This resolution authorizes the sale of County general obligation bonds to provide permanent financing for the costs of the Project and also establishes the County’s right to fund project expenditures with available cash and then reimburse the cash accounts with the proceeds of a subsequent bond issue. The expense reimbursement period is 18 months after completion of the project or three years after the original expenditure is made, whichever is later. This provides a mechanism through which the project can be expedited and the permanent financing of the project can be delayed until an optimal future time.
The bonds authorized in this resolution are scheduled to be sold in 2012.
Alternatives:
This project could be funded in whole with the portion of sales tax dedicated to road construction projects. However, as the anticipated amount of this funding has been fully allocated to other road projects and reserves for future projects, doing so would require the elimination of funding for this project.
The project to be funded with these bonds likewise could alternatively be funded with general County reserves. Doing so, however, would require an unplanned reduction of the level of reserves, which potentially could lead to future increases of property taxes as well as to a downgrade of the county’s bond rating.
In addition, the projects could be financed with proceeds of a KDOT revolving loan fund.
Financial Considerations:
Issuance of these bonds is contemplated in the County’s financial plan and Capital Improvement Program. As general obligation debt, the bonds will be secured by a pledge of the County’s full faith and credit, meaning bondholders will be able to compel the levy of property taxes if necessary to repay the debt.
The preliminary estimate of annual debt service required to repay these bonds is $273,000. The financial plan contemplates the bonds will be repaid with an annual property tax levy; a tax rate increase of approximately 0.063mills would be required to do this. An alternative is to repay the debt with sales tax drawn from the share of sales taxes that are dedicated to road and bridge construction projects. This would reduce the amount of cash available each year from the dedicated sales tax for pay-as-you-go road projects. The source of funds used to repay this debt will be determined annually through the budget adoption process.
Legal Considerations:
K.S.A. 68-5,103 authorizes the Board of County Commissioners (the “Board”) to determine it necessary to construct improvements on any existing roads or highways in the County and provides for payment of the costs thereof by the issuance of general obligation bonds of the County; provided the amount of bonds issued in any one fiscal year cannot to exceed the greater of 0.5% of the taxable tangible assessed valuation of the County (approximately $24,130,121.27) or $1,000,000. Before any such bonds shall be issued, a resolution shall be adopted by the Board determining the necessity of said improvements, the roads, highways or streets to be improved, the improvements to be made, the estimated cost thereof and the amount of general obligation bonds to be issued to pay the cost; said resolution to be published once a week for two (2) consecutive weeks in a newspaper of general circulation in the County, and if within 90 days after the last publication of said resolution there shall be filed in the office of the County clerk a protest petition signed by registered voters of the County equal in number to not less than 3% of the votes cast in the County for the office of governor at the last general election at which a governor was elected, an election shall be called and held in accordance with the general bond law; but if no protest is filed, an insufficient protest is filed or if an election is held and the proposition is approved by a majority of those voting thereon, the Board may issue the general obligation bonds in the amount specified in the resolution. Bonds issued under this statute do not count against the County statutory limits of indebtedness.
K.S.A. 68-1103 authorizes the Board to determine that it is necessary to build or repair any road, bridge or culvert, and to appropriate funds to provide for the payment of such improvements or if the amount appropriated is not a sufficient to issue general obligation bonds of the County to pay the costs thereof; except that no such bonds shall be issued until the Board shall have published a resolution authorizing the issuance of such bonds once each week for three consecutive weeks in the official county newspaper and if within 60 days following the last publication of such resolution, a petition in opposition to the issuance of such bonds, signed by not less than 5% of the qualified electors of the county, is filed with the county election officer, no bonds shall be issued unless a majority of the electors voting on the question of issuing such bonds approve the same at an election called and held in the manner provided for the calling and holding of elections under the general bond law; further provided if no protest is filed, an insufficient protest is filed or if an election is held and the proposition is approved by a majority of those voting thereon, the board of county commissioners may issue the general obligation bonds in the amount specified in the resolution. Bonds issued under this statute do count against the County statutory limits of indebtedness.
The Resolution authorizes the Projects and bond financing under both referenced statutes. When the 60 day protest period expires without protest, the County is authorized to issue bonds pursuant to K.S.A. 68-1103. When the 90 day protest period expires without protest, the County is authorized to issue bonds pursuant to K.S.A. 68-5,103, which bonds do not count against the County statutory limits of indebtedness.
Policy Considerations:
These bonds are subject to the County’s adopted debt policy. It provides five ratios that are used to define a limit on the total County debt that may be outstanding at any point. If at any time two of the ratios are found to exceed the specified maximum levels, additional debt is not to be issued until the ratios have been reduced to fall within acceptable levels. The issuance of debt to finance these road projects will not cause two of the ratios to be exceeded, and so the requested debt authorization is permitted by county policy.
Including these bonds and all other debt to be issued in 2012, the ratios will be as follows.
|
Ratio |
Policy maximum |
Estimated actual |
|
Per capita direct debt |
$500 |
$321 |
|
Direct debt as % of full market value |
1.5% |
0.46% |
|
Per capita direct, overlapping & underlying debt |
$3,000 |
$3,400 |
|
Direct, overlapping & underlying debt as % of full market value |
6.0% |
4.89% |
|
Annual debt service as % of budgeted expenditures |
20% |
10.23% |
Outside Attendees:
Joe L. Norton, Gilmore & Bell, PC, Bond Counsel.
Multimedia Presentation:
No