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05-19-2005 (Citizens Bond Committee) Minutes MINUTES Wylie Citizen Bond Advisory Committee Thursday,May 19,2005—7:30 p.m. Wylie Municipal Complex—Council Chambers 2000 State Highway 78 North CALL TO ORDER Committee Chairman Jay Whitlow called the meeting to order at 7:31 p.m. with the following Committee Members present: Daniel Chestnut, Doris Craighead, Jay Cummings, Jamie Gregg, Jim Griffin, Linda Jourdan, Chuck Kerin, Dennis Larson, Grace Morrison, Mike Phillips, Chris Seely, and Jeri Smith.Members absent were: Vice Chairman Marvin Fuller and Janet Johnston. Staff Present were: City Manager, Mark Roath; Fire Chief, Shan English; Public Services Director, Mike Sferra; Finance Director, Larry Williamson; Public Information Officer, Mark Witter; and Executive Assistant,Brandy Brooks. DISCUSSION ITEMS 1.Approval of the Minutes of May 12,2005 Chairman Jay Whitlow asked if there were changes that needed to be made to the minutes. The Committee Members voted 12 -FOR and 0 -AGAINST in favor of approval. Chairman Whitlow advised the Committee members that this meeting would be the last containing formal presentations from groups from the City; therefore the next meeting, the Committee will begin to take everything presented and start formalizing a recommendation to the Council. CITIZEN PARTICIPATION - With no one addressing the Committee,Chairman Whitlow proceeded to Discussion Item 2. DISCUSSION ITEMS 2. City's Ability to Borrow and Bond Coverage Generated by New Growth David Medanich and Nick Bulaish, representatives from First Southwest,presented the Committee with information relating to Bond Issuance and current City funding capacity. He first went over the Bond Issuance Process, by explaining that there are two different options for selling bonds for the purposes of capital improvements. One option is Certificates of Obligation, which do not require an election, are tax supported, and have a revenue pledge on the water and sewer systems. The process for Certificates of Obligation involves placing a notice in the paper on the same day two consecutive weeks that states the amount to be sold, a general description of projects included, and the date that the Certificates of Obligation will be sold. It is an easy process, and can be completed in approximately 4 months. Another option is issuing General Obligation Bonds, which requires an election. He explained that the market views both ways of financing equal, as both have a tax obligation attached to them. While 4B funds were recently used to issue Certificates of Obligation, there are currently very few funds available, so the Committee should be looking at either Certificates of Minutes-May 19,2005 Citizens Bond Advisory Committee Page 1 Obligation or General Obligation Bonds. Larry Williamson agreed that 4B revenues would not offer much funding capacity. Mr. Medanich then explained that the funds available for projects were based on a conservative growth rate, with 10% in 2006, and 8% for each year thereafter. Mr. Bulaish informed the Committee that without a tax rate increase, selling bonds over a 3-year span, that is,in 2006, 2008 and 2010,the amount would be approximately $12.4 million. Mr. Medanich explained that if growth was to expand to 20% in 2006 and 15-17% each year thereafter, the amount would increase to almost $28 million. He explained that $50 million would translate to a tax rate increase of 8-100, $75 million would mean a 150 increase and$100 million would represent a 300 tax rate increase, assuming the 3-year span. Mr. Medanich explained that once the projects to be included on the bond are identified, a better estimate of costs could be given. He stated that issuing all the funds in one year would mean a substantially smaller package than issuing bonds over time. He informed the Committee that phasing the selling of bonds could dramatically change the tax rate, because they are ultimately dependant on the growth of the tax base, or rooftops. Mr. Chestnut asked what the tax increase would be on $75 million, and Mr. Bulaish stated that it would be approximately 25-260,based on the conservative growth rate. (Mr. Roath introduced the Finance Director, Larry Williamson, to the Committee, so they would recognize him when Mr. Medanich referred to him.) Mr. Chestnut asked if spreading the amounts out over several years would lessen the tax. Mr. Medanich explained that if the City sells all the bonds in one year, the tax rate would increase substantially, because the City isn't able to take advantage of growth in the tax base. As growth increases, then the rate will slowly be able to fall. If the City phases the selling of bonds, it can increase its rooftops, and the tax rate will not be impacted as much. The City can increase marginally, and as growth increases, it won't have to increase the tax rate as substantially. He explained that with a more formal list of what the timeline of the projects will be,the more accurate numbers he will be able to provide. Mr. Roath inquired about the life span of the bonds. Mr. Medanich explained that legally, bonds can have a life of 40 years, but cities normally set a life of 20-25 years. He stated that bonds are similar to home mortgages, in that the City gets more money for a 25 year bond than it does with a 20 year bond, but the interest rate is a bit higher. Principle on debt is paid each year, so even if the projects included in the bond package have a useful life of less that the 20-25 years, the principle paid in the first few years can be justified as paying for those projects. He also explained that anything shorter than 20 years would greatly impact the tax rate, and the number of projects would greatly decrease, but there might be a lower interest rate. Mr. Larson asked about the current municipal interest rates. Mr. Medanich stated that 20 year debt currently has an interest rate of 4.5%, a 25 year is 4.6% and a 15 year may be around 4%; however, if you calculate a present value on each, they all equal about the same. He explained that a 20- or 25-year debt will have lower annual payments. He stated that with the number of projects the Committee is looking at doing,he would suggest 20-25 year debt. Mr. Williamson asked Mr. Medanich to explain the Call Provision in bonds. Mr. Medanich stated that within the sale of bonds, there is a Call Provision that allows the City to re-fund or refinance the bonds, if the interest rate is lower. He also explained there is an Advance Re-funding option that can be done after two or three years, if the rates are low enough to warrant it. Mr. Larson asked if we were likely to see lower interest rates in 10 years. Mr. Medanich explained that on the Yield Curve, the first year's interest rate may be 1.5%, and at 25 years, it will be around 5%; after 10 years, the bonds are left outstanding and each maturity will have a different rate attached to it. Therefore, if may be cost effective to re-fund the bonds if the higher interest rate bonds are still outstanding. Minutes—May 19,2005 Citizens Bond Advisory Committee Page 2 Mr. Roath asked Mr. Medanich to explain, from a cost standpoint, the difference between holding one Bond Election every few years, and holding one Bond Election and phasing the sale of bonds. Mr. Medanich stated that the amount of time and work dedicated by Staff and Committee members is a good example. Also,elections are expensive,and if the City has a plan developed to provide for the next three to five years, it can issue the bonds and begin the projects within the guidelines of the tax rate. He informed the Committee that even though the voters authorize sale of bonds, the City doesn't have to sell them,just that they are authorized to do so.Therefore,if the growth increases, some projects may be accelerated based on need; if growth slows, some projects may be pushed out. Phasing the sale of bonds is very beneficial, because it is extremely difficult to only plan one year out, and the time and money spent on the Election process is not fiscally responsible for the taxpayers. Mr. Phillips asked if there were any bonds remaining from the 1999 Election, and Mr. Roath informed the Committee that the last of the funding was just sold this year. Ms. Morrison inquired about tying amounts to specific projects. Mr. Medanich explained that only certain items can be combined within propositions. However, the projects covered under the amounts are left as broad as possible to allow for re-distribution of funds. For example, if the City specifies that Street A will cost $500,000 to build, and the project is finished at $250,000, the City cannot re-allocate those funds to another project. Mr. Medanich also explained that his understanding of the law relating to facilities is that if the facilities are attached, they can appear in the same proposition; however, if the facilities are not attached, they must be voted on separately. He informed the Committee that once projects were defined, the Bond Counsel would assist them with what projects could be combined under the same proposition. The Counsel will prepare all the legal documents and they will be sent to the Attorney General for approval. Mr. Cummings asked if there were any bonds prior to 1999 that are about to expire. Mr. Williamson stated that there is a 1988 issue that is about to be paid off, but it is not very much. Mr. Bulaish explained that there are tax notes scheduled to pay off in 2007,but they also do not amount to much. Mr. Chestnut asked about putting all the facilities together as one proposition. Mr. Medanich stated that his belief is, to the extent that the Committee can combine projects under one proposition, it should do so; however, the law only allows the combining of certain projects, such as streets and drainage, police and fire, and facilities if they are connected. Mr. Williamson inquired about the language difference between a General Obligation Bond and a Certificate of Obligation Mr. Medanich explained that there is very specific language that goes in a proposition; whereas a Certificate of Obligation is broader and multiple facilities can be combined. Mr. Phillips asked about the City's Bond Indebtedness and if any portion is paid by impact fees. Mr. Williamson stated that, excluding self supporting debt, the City's outstanding General Obligation Bond debt is $23 million. Mr. Bulaish concurred that the figure is $23-24 million, and $28 million is outstanding when self supporting debt is included. Mr. Medanich explained that debt is paid out of water, sewer and sales tax revenues,but impact fees are not used for that purpose. Mr. Griffin expressed the necessity of presenting the information to the voters as what the City needs versus what the City wants. Mr. Medanich informed the Committee that there will be specific purposes outlined for debt issuance. He stated that the reason many Bond Elections fail is that the average citizen doesn't care what the tax rate is,just how it will affect him or her. Mr. Larson asked what impact a tax Minutes—May 19,2005 Citizens Bond Advisory Committee Page 3 rate increase will have on yearly tax rates. Mr. Williamson explained that a 250 tax increase will increase property taxes by$250 yearly for a$100,000 home. Mr. Kerin asked about how to decide on a General Obligation Bond versus a Certificate of Obligation. Mr. Medanich told the Committee that if the City utilizes a General Obligation Bond Election to authorize $100 million, it can sell that amount over whatever time period it chooses. With a Certificate of Obligation, the City must give notice on exactly the amount it will sell and the specific date the Certificates will be sold. Mr. Larson inquired about phasing and how it might affect the tax increase. Mr. Medanich stated that with phasing, the tax rate might not increase as substantially, because the City can take advantage of growth rate. He stated that sometimes, cities prefer to set their tax rate where it will ultimately climb to and leave it there until debt is such that the rate can be lowered, or they slowly grow the rate to its highest point and level off.He said the goal is to avoid peaks and valleys in the tax rate. Mr. Williamson asked about the tax rates for debt for other cities around the Metroplex. Mr. Medanich informed the Committee that Wylie's tax rate for debt is approximately 130, which is very moderate. He explained that for a growing community, the tax rate will generally be higher because the City's needs are ahead of its ability to pay. Mr. Phillips asked what the City's current bond rating was. Mr. Medanich told the Committee that the current General Obligation Bond rating is currently A 1 1, and the highest is AAA. He stated that the rating represents not only what a city currently looks like financially,but also what it will look like after the completion of debt payoff. He also explained that the rating agency looks at cities each year to determine how they are adjusting to growth and if they have good economics, and the rating will go up as that city improves. 3. Fire Department's Capital Improvement Project List Fire Chief, Shan English presented information regarding the Wylie Fire Department's Capital Improvement needs. The first project is a training center that is five stories tall, to be located behind Station 2, and has simulated apartments and a house. The facility will cost approximately $4.4 million, because the concrete will be 8 inches thick, the building will last for approximately 30 years, and it will adequately provide for every type of training necessary to successfully fight fires. The ISO 1 rating that Wylie Fire Department currently has is directly related to an adequate training facility that must be at least as tall as the tallest building in the City, up to 10 stories. Mr. Kerin asked if a regional training facility had been explored and if other cities would reimburse the City to use the training facility. Mr. English explained that Wylie has explored the possibility of a joint training facility, a regional dispatch center and a regional mechanic shop with shared costs, and with the exception of shared ambulance service, other cities would not participate in regional efforts. He also stated that other departments do not train at Wylie's current training center, even though the offer has been extended. Ms. Morrison asked if CCCCD offered training. Mr. English informed the Committee that while firefighters take classes at CCCCD, taking City of Wylie equipment to the facilities is not an option, as it leaves the City unprotected. The second project is a Lake Rescue / Swift Water Simulator, that will be fed by water pumped through it, possibly from the reservoir behind Station 2. The need for this simulator is a result of training requirements by the Government. Collin County Fire Departments decided to split responsibilities. Allen will provide for trench rescue, McKinney is High Angle / Confined Space Rescue, Plano will perform Urban Search and Rescue, Frisco will provide Heavy Rescue, and each Minutes—May 19,2005 Citizens Bond Advisory Committee Page 4 department has purchased equipment and begun training. Wylie has responsibility for Swift Water / Lake Rescue. Much of the equipment has been purchased through the use of grants; however, WFD must travel to Fort Worth to train for the Swift Water Rescue. Mr. Cummings asked about the possibility of WFD being centrally located as part of the Town Center concept. Mr. English stated that the current town center concept being explored on the Wells property would locate Station 2 just minutes from the Town Center, and while there had been discussion about relocating Station 2 to the Town Center, it would not improve response times, and would const the taxpayers approximately $1.5 million. Mr. Larson asked if there was a possibility of locating Fire Administration in the Town Center and what advantages there would be to Police and Fire sharing space. Mr. English stated that Police, Fire Administration, Dispatch and possibly EOC could be located within a Public Safety building at the Town Center.The benefits would be common areas that could be shared, such as training rooms, the Emergency Operations Center. With the amount of interfacing done between dispatch and both departments, having them centrally located would be another benefit. Mr. Roath informed the Committee that unlike some cities in the area, Dispatch falls under the supervision of the Fire Chief, and he does a very good job. Mr. Griffin asked if the proposed training facilities would allow WFD to handle all known emergencies. Mr. English stated that it will, because of the shared responsibilities throughout the County. Chairman Whitlow called a short recess at 8:48 P.M. Chairman Whitlow re-convened the meeting at 8:59 P.M. 4.Public Services Department Capital Improvement Project List Public Services Director, Mike Sferra presented information on the Public Services Department Capital Improvement needs. He first reviewed the 1999 bond project. At Community Park, we spent $215,000 and installed soccer field lighting, minor drainage improvements, miscellaneous sidewalks and a 5,000 foot 6' wide asphalt walking trail. At Founders,we spent nearly$500,000 and constructed two lighted baseball/softball fields, and installed lighting on several soccer fields. He then reviewed projects recommended for Community Park, a 43 acre park located behind the library at Thomas and Pirate. The proposed projects total $1.25 million, and include bleachers that are safer for spectators, installation of an 8' wide concrete walking trail,per the Parks Master Plan. It also includes drainage and irrigation improvements to athletic fields, bringing outfield fences closer, building a higher quality concession and restroom center, and constructing a fourth t-ball field. He also reviewed projects at Founders Park, a 65 acre park located behind the high school, needs approximately $5.47 million dollars for projects. These projects include constructing a permanent concession stand and restroom center, two more lighted baseball fields to finish out a four-plex concept. Fourteen soccer fields would also be included in the package, seven lighted fields for games, and seven fields for practice, all of which were recommended in the Master Plan. A pavilion, picnic areas, a basketball court and a walking trail around the perimeter of the park as well as ancillary trails to various locations within the park are all included in the cost. Mr. Larson asked about additional parking at Founders Park. Mr. Sferra informed the Committee that an additional 850 spaces are proposed at the south end of the current two baseball fields. Mr. Griffin asked about the parking proximity to the playground.Mr. Sferra stated that the parking would be close Minutes—May 19,2005 Citizens Bond Advisory Committee Page 5 to the playground, because it is just east of the current baseball fields. Mr. Larson asked if the soccer fields planned for Founders Park were to accommodate current need or future growth. Mr. Sferra stated that the Parks Master Plan called for 14 additional fields by 2011. Mr. Cummings asked if there were any plans to convert soccer fields at Community Park to baseball or T-ball fields, due to the addition at Founders. Mr. Sferra informed the Committee that there are currently no plans to convert fields at Community Park. Mr. Sferra then explained that the Wells property, a 253 acre tract that the City recently acquired, has not yet been Master Planned, but he believes that once it is, it will cost approximately $5 million to make improvements that the citizens can utilize. Mr. Larson asked if the funds would be for a nature use, and Mr. Sferra informed the Committee that while the City is unsure what the Master Plan will call for, he is confident that it will take $5 million in improvements to make the area useable by the citizens. Mr. Seely asked if the $5 million includes the 40 acres that will be acquired just west of the current tract. Mr. Sferra stated that the Master Plan would likely include that area, as it would increase the size to approximately 300 acres. Mr. Griffin inquired about the inclusion of the F.M. 1378 alignment on the Master Plan, and Mr. Sferra explained that it would be incorporated, as would possible uses for the current roadway. Mr. Phillips asked when the Master Plan would be underway. Mr. Sferra informed the Committee that it would take up to 3 months to hire an architect and to see any measurable results. Ms. Morrison asked if a swimming pool was included in the proposed amount, and if a pool would be within the Parks Department. Mr. Sferra stated that the aquatic center has been proposed under the Facilities Study and that it is not included in the Parks Capital Improvement list; however, if one were built, it would fall under the auspices of the Parks and Recreation Department. Mr. Larson asked if there was any possibility for something more concrete on the Wells property before the bond package is submitted, as citizens might have a problem giving the City a blank check. Mr. Sferra stated that if Staff could develop information in a very short time period, he would present it to the Committee. Mr. Chestnut recommended utilizing the City survey that was sent out as part of the Parks Master Plan process to identify what could be done with the Wells property. Mr. Chestnut asked if the Parks Master Plan recommended a site north of the Wells property and if the City would be pursuing a property in the Sage Creek area, which would allow for fields in the northern portion of the City, as opposed to having them concentrated at Founders Park and on the Wells tract. Mr. Sferra stated that the Master Plan did recommend a regional park north of the Wells tract; however, with the successful acquisition of the Wells tract, time will tell if an opportunity to acquire other parkland to the north. Mr. Griffin asked if there were any funds being appropriated for Olde City Park. Mr. Sferra stated that all the projects being presented were identified as goals in the Parks Master Plan, and that Staff is attempting to meet as many of those goals as possible. Mr. Phillips asked when the Master Plan was developed, what growth potential was used to project the City to 2011, when the last impact fee study was done, and what growth rate was used. Mr. Sferra stated that the Master Plan was adopted in 2002, and the projected population for 2011 was 38,500. He also stated that the impact fee study was completed two years ago, and he was unsure of the growth rate, but he would get back to the Committee with that information. Mr. Roath informed the Committee that the City is currently working on updating the Impact Fees, and a large part of that is finalizing a Land Use Plan, which the City will use to project potential population. Mr. Williamson stated that a 20% growth rate would mean only an increase of$3 million, because it is about housing permits and growth in number of rooftops,as opposed to population growth. Minutes—May 19,2005 Citizens Bond Advisory Committee Page 6 ADJOURNMENT With no further business before the Committee,Chairman Whitlow adjourned the meeting at 9:31 p.m. Jay Whitlow,C a man ATTEST: 4ealL /40 Mark B.Roath,City Manager Minutes—May 19,2005 Citizens Bond Advisory Committee Page 7