Meeting Summary
Announcements
- The election for capital improvement projects has been deferred from November to February.
- For a February election, approval of necessary documents would need to occur by 📅 December 8th.
- Draft documents for review are expected to be available by 📅 November 1st-5th.
- A next meeting to discuss specific projects is tentatively scheduled for 📅 October, though not yet confirmed.
- It is possible to issue a short-term bond for certain projects before the end of the current calendar year or early next year.
Financial Matters
The special call meeting was a work session focused on understanding various funding options for Capital Improvement Projects (CIPs) in Shawnee. Financial consultants presented detailed parameters for General Obligation (GO) Bonds and Sales Tax funding.
General Obligation (GO) Bonds
GO Bonds are backed by property taxes and come in two main types:
- Article 10, Section 27 (Public Utilities, Streets, Roads, Bridges):
- Projects must be logically grouped (e.g., all street projects, all park projects, or all public safety projects).
- Cannot combine popular and unpopular projects into a single proposition.
- 70% of bond proceeds must be identified for specific projects (e.g., specific streets to be repaired). The remaining 30% can be used for other projects within the same general category.
- Public utilities funded must be exclusively owned by the city.
- There is no legal mill limit, but the city typically targets an average mill level to manage tax impact.
- Estimated tax impact for a $100,000 home for a $20 million bond over 20 years is approximately $110 per year (11 mills). For a 10-year term, it would average 12 mills with a high of 17 mills.
- Requires a 50% + 1 majority vote.
- Article 10, Section 35 (Economic and Community Development):
- Offers more flexibility as the 70% specificity requirement does not apply. Projects can be described more generally.
- Limited to a 5-mill levy per year, which could generate approximately $6-7 million.
- No ownership requirement, making it suitable for projects with complex title issues or joint ownership, such as certain drainage improvements, sidewalks, trails, or economic development initiatives.
- Can be used for a broad range of purposes, including incentivizing development, demolition, and revitalization efforts.
- Can be issued as tax-exempt or taxable bonds, with taxable bonds typically having higher interest rates.
- Requires a 50% + 1 majority vote.
Sales Tax Funding
Sales tax is another flexible funding mechanism for CIPs:
- No specificity requirements like GO bonds; projects can be as general or specific as desired.
- The city has an opportunity to leverage approximately $750,000 per year freed up from a recently paid-off bank note. This could allow borrowing an additional $6 million over 20 years or $7 million over 10 years without increasing the current debt service.
- This freed-up revenue could be used to fund a short-term $3 million bond for immediate projects, such as Expo parking lot improvements and the library roof. This type of revenue note/bond would not require new voter approval.
- Interest rates for sales tax bonds are generally higher than for GO bonds.
- Requires a 50% + 1 majority vote.
TIF District Clarification
New GO bonds would apply to the full assessed property value, but the existing TIF (Tax Increment Financing) District would only receive funds from the increased property value above its baseline. This means new GO bonds would not negatively impact the TIF District's existing funding mechanism.
Project Grouping & Next Steps
- Most projects can be funded through sales tax.
- Due to ownership requirements, projects like the Expo improvements and Regional Park cannot be combined under Article 10, Section 27 GO bonds.
- Economic Development, Neighborhood Revitalization, Sidewalks, and Trails are better suited for Article 10, Section 35 GO bonds or sales tax due to their broader definitions and ownership flexibility.
- The financial consultants requested that the Council provide a detailed Excel sheet listing all proposed projects, their estimated costs, and timelines for expenditures. This information will allow them to structure optimal funding mechanisms and prepare clear ballot propositions for the upcoming February election.
Key Decisions & Votes
No formal decisions or votes were taken during this work session, as its purpose was to inform commissioners about funding options and parameters.
Public Comments
No public comments were recorded during this meeting.
Agenda Summary Table
| Agenda Item | Description