Memorandum

City of Lawrence

City Manager’s Office

TO:	Mayor and City Commission
CC:	Diane Stoddard, Assistant City Manager Brandon McGuire, Assistant to the City Manager Bryan Kidney, Finance Director
FROM:	City Manager David Corliss Casey Toomay, Assistant City Manager
DATE:	02/08/15
RE:	Police Facility

Staff has recently reviewed planned and committed revenues and capital projects to determine whether significant re-prioritization of projects could be accomplished to allow for the debt issuance sufficient to design and construct a $26 million police facility on City owned property.  This memorandum provides for a re-prioritization option for consideration.  Additional options can also be considered, however, there are a number of consequences which must be analyzed with each option.    It is possible to use existing property taxes and a portion of the City’s share of the existing countywide sales to move forward with design of a new police facility on City-owned land in 2015, provided a number of capital projects, mainly street and facility improvements, be deferred.   

Amount of New Debt Required

While the total project cost would be $26 Million, it would not be necessary to issue a total of $26 million of new debt.  Instead, the City would be able to use proceeds from the sale of the Investigation & Training Center, the City’s interest in the County-owned Judicial Law Enforcement Center, as well as other surplus city-owned property, along with $1.5M of previously authorized debt to lower the amount of the new debt issuance required to $22.6 million. 

Total Project Cost	$26 Million
Less proceeds from land sale	-2 Million*
Less previously authorized debt	-1.4 Million
New Debt Required	22.6 Million**

*    Funding from the City’s share of the countywide sales tax proceeds would be used for the upfront project costs but would be reimbursed from the sale of property.

**   Estimates based on projected interest rates.  Actual interest rates may vary

Option Requires Use of City-owned Property or Property Donated to the City. Because this funding scenario uses the proceeds of City land sale and vacation of the JLE to reduce the amount of the debt issuance, this option requires the use of either currently owned City property (e.g. Overland/Wakarusa site, VenturePark, etc.) or other property which does not cost the City.  The funding scenario above does not provide funds for property acquisition.  In order to proceed, the facility must be located on city-owned property (or otherwise free property.)   

Funding Sources

In order to make bond and interest payments on $22.6 million of new debt, the City would use two existing revenue sources.  Revenue from the existing property tax for the Bond and Interest Fund would be used to pay off $4.5 million, while the City’s share of the proceeds from the existing countywide sales tax would be used to pay off $18-19 million of new debt.

Repurposing Countywide Sales Tax

This funding scenario would require the proceeds from the City’s share of the countywide sales tax to be repurposed over the next twenty years.  Very little funding would be available for any significant capital improvement projects for Parks and Recreation for the twenty-year term of the debt.   This would include both new park additions, new recreation facilities, and major maintenance of existing facilities (aquatic centers, recreation facilities, etc.).  Funding available for maintenance at Parks and Recreation facilities historically paid out of this funding source would also be frozen at the current level of $500,000 per year.  In addition, the annual growth rate of the transfer to the Recreation Fund for operations was reduced from 4% to 3.5% each year.  This reprioritizes funding from operational and capital support for Parks and Recreation to debt support for the Police Facility.

Impact on CIP

In order to utilize existing funding sources, a number of projects in the City’s current multi-year Capital Improvement Plan would need to be deferred or removed.  A new proposed CIP is attached.  Nine projects would be deferred or eliminated over the planning period.  Changes are as follows:

· The rehabilitation of Fire Station 1 would be moved from 2015-2016 to 2018-2019;

· Construction of 19^th Street, Harper to VenturePark would be moved from 2016 to 2017;

· The 9^th Street Corridor project would largely be funded through Infrastructure Sales Tax instead of Debt, which would eliminate funding for reconstruction of Wakarusa, Research Parkway to  Clinton Parkway;

· The reconstruction of Kasold, 6^th to Bob Billings would be moved from 2016-2017 to 2017-2018;

· Reconstruction of Wakarusa, Inverness/Legends to 6^th would be moved from 2016-2017 to 2018;

· The funding for the City Share of Queens Rd. would be moved from 2017 to 2019;

· Reconstruction of E. 23^rd Street would be moved from 2018-2019 to 2019-2020;

· Reconstruction of Kasold, Clinton Parkway. to the entrance to Hy-Vee would be moved from 2018 to 2020; and

· The consolidated City Office Space/ One Stop Shop (consolidated location for development – related services) would be moved from 2019 to at least 2021.

· Repurposing the city’s share of the countywide sales tax as allowed by the language in the 1994 sales tax.

Timeline

An estimated timeline for the project, including when the funding would be available, is provided below.

Determine Location/ Start Design	Summer/Fall 2015
Construction Begin	Spring/Summer 2016
Note proceeds available	Fall 2016
Construction completion	Fall 2017
Issue Long term financing	Fall 2017
First debt payment due	Fall 2018

Conclusion

By changing priorities and deferring a number of previously identified capital projects, it would be possible to use existing property taxes and a portion of the City’s share of the existing countywide sales tax over the next twenty years, to move forward with design of a new police facility on City-owned land in 2015.  The mill levy in the bond and interest fund would remain at approximately 8.5 mills and the balance in the fund would remain appropriate.