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8.4 Pacific Avenue Improvements FinancingCITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE TIME 03/14/11 4:00 P.M. AGENDA SECTION ORIGINATING DEPARTMENT: FISCAL APPROVAL: 8 NO: BY: Finance & Administration FINAL APPROVAL: ITEM NO:4 BY: Rod Franz BY: Page 1 ITEM: Resolution No. 11-6809 Finalize financing for the Pacific Avenue Improvement Project BACKGROUND: In December 2004, the City Commission directed staff to proceed with a project to improve about 800 feet of Pacific Avenue from Front Street east to connect the urban portion with the Ohio Street Grade Separation project. Because of necessary coordination with the Ohio project, a design contract with Wilson and Company was executed in March 2005. It was the intent to begin construction in the 2006 or 2007 season, pending completion of the sections related to the Ohio Street project. The initial scope of the project, consistent with the construction standards of the time, included an urban section of paved roadway with surface drainage provided by curb and gutter. No sidewalks were included. Concomitant with the design contract, Bonds were authorized in the maximum amount of $300,000 based on pre-design project estimates. Actual financing was provided in the 2007-1 temporary note issue and rolled into the 2008-A bond issue. As the design of the project pr oceeded, it became apparent that the drainage i ssues in the area would not be adequately addressed by a curb and gutter solution; therefore the scope of the project needed to be increased to incorporate sub-surface storm sewers. The estimate for the project was increased to $500,000 to accommodate these changes with the incremental funding to come from the Capital Improvements sales tax. The project became ready for bid in early 2010. In the intervening time, City policy regarding public improvements had changed to incorporate an emphasis on “connectivity”. Meaning, in this context, the provision of sidewalks or bicycle trails in conjunction with street projects whenever feasible. As a result, sidewalks (1,600 ft) were incorporated into the project. The project bid was awarded on May 17, 2010, in the amount of $440,436.90. Since that time, three change orders were issued, with City Commission approval, in the net amount of $43,125.01. Total construction cost of the project, net of an engineering refund of $7,587, are thus $483,561.91. Other costs incurred total $85,489.88, and include design, legal costs, bond issuance costs, and temporary note interest. Total cost of the project is $569,620.70. Funding currently available includes $300,000 in bond proceeds and $200,000 in Special Sales Tax funding. We need to make additional funding ($69,620.70) available in order to finalize the project. There are two options for proceeding. CITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE TIME 03/14/11 4:00 P.M. AGENDA SECTION ORIGINATING DEPARTMENT: FISCAL APPROVAL: 8 NO: BY: Finance & Administration FINAL APPROVAL: ITEM NO:4 BY: Rod Franz BY: Page 2 First, authority to issue additional bonds could be extended by adopting Resolution No. 11-6809 attached. This would permit issuance of up to $75,000 in additional bonds (incorporated within the 2011-A issue) to cover the final cost of the project. This is not an unusual procedure; the City has, from time to time, issued supple mental authorizations as the co sts of a project become more apparent. In this particular case, the initial authorization was based on a very preliminary estimate, done well before the design of the project was complete, or bids were received. Since the final project incorporated elements (sidewalks) that were not contemplated in the original estimate and funding provisions, it is not surprising that a modification is necessary. This approach would result in the costs (plus interest) being spread over a ten year period, and would have no impact on the current years budgetary plans. There would be a small adverse impact on future year debt service costs and associated mill levies. The second approach is to fund the increment needed from the Special Sales Tax Capital Improvements fund. As currently structured, this fund is fully committed for 2011. After consultation with the Public Works Department, staff has identified a project that will almost certainly not come to fruition this year, or perhaps several years. The fund includes an appropriation to construct a salt storage building, at an estimated cost of $155,000. However, this project has stalled due to the difficulty in finding a suitable and affordable location for the facility, and the appropriation could be made available for the completion of the Pacific Avenue link. Any future requests for a salt storage facility will then have to compete with other capital requests in future years. FISCAL NOTE: Implementation of Option 1 (issue supplemental bonds) will result in an annual cost of about $9,500 per year in the Bond and Interest fund that is not now incorporated in our debt service projections. It would leave the resources now committed to the salt storage building available for other purposes, either now or in future years. Implementation of Option 2 (use of Sales Tax) w ould not make future de mands on the Bond and Interest fund, but does commit approximately half of the resources that had been committed to the Salt Storage facility. CONFORMANCE WITH STRATEGIC PLAN: The City will provide the highest quality of services, consistent with governing body direction, available resources and staff commitment to quality. COMMISSION ACTION OR RECOMMENDED ACTION: If the City Commission’s desire is to proceed with a supplemental Bond issuance, then Resolution No. 11-6809 needs to be adopted. In this case, th is supplemental amount will be included in the 2011 summer bond issue. If the City Commission’s desire is to provide funding from the Capital Improvements Sales Tax, then and action to amend the Capital Improvements Sales Tax Fund budget is sufficient to proceed. RESOLUTION NO. 11-6809 A RESOLUTION AMENDING RESOLUTION NUMBER 05-6168 RELATED TO THE INITIATION OF CERTAIN STREET IMPROVEMENTS IN THE CITY OF SALINA, KANSAS. WHEREAS, the Governing Body of the City of Sa lina, Kansas (the “City”), has designated Pacific Avenue as a main trafficway pursuant to K.S.A. 12-685 et seq. (the “Act”); and WHEREAS, the Governing Body of the City has determ ined that it is necessary to improve or reimprove portions of said main trafficway as follows: The improvement of Pacific Avenue to include pa ving, curb and gutter, and storm drains from a point 150 feet west of the intersection with Front Street east to a point 300 feet west of the intersection with Ohio Street (the “Improvements”); and WHEREAS, on March 21, 2005, the City adopted Resolution No. 05-6168 authorizing the Improvements at a total estimated cost of $300,000 plus costs of issuance and plus costs of interest on any temporary financing; and WHEREAS, the actual costs of such improvements is estimated to be $375,000 plus costs of issuance and plus costs of interest on any temporary financing, and the Governing Body desires to amend Resolution No. 05-6168 to provide for the payment of such costs. NOW, THEREFORE, BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS: SECTION 1. Section 3 of Resolution No. 05-6168 is hereby amended as follows: Section 3. It is anticipated that the cost of the Improvements shall be paid from funds of the City available for such purpose and/or by the City-at-large through the issuance of one or more series of general ob ligation bonds of the City as provided by the Act, and pending the issuance of such bonds, thr ough the issuance of one or more series of temporary notes of the City, the estimated maximum principal amount of such obligations being $375,000, plus costs of issuance and plus costs of interest on any temporary financing. SECTION 2. The City expects to make capital expenditures on and after the date of adoption of this Resolution in connection with the Improvements and intends to reimburse itself for such expenditures with the proceeds of one or more series of general obligation bond s and temporary notes of the City in the estimated maximum principal amount of $375,000, plus costs of issuance and plus costs of interest on any temporary financing. SECTION 3. This Resolution shall be full force and effect from and after its adoption. Adopted by the Board of Commissioners and signed by the Mayor this _____ day of ________, 2011. __________________________________ (SEAL) Mayor ATTEST: ________________________________ City Clerk