9.b 1 Memo -- Street Reconstruction BondsECKBERG LAMMERS
MEMORANDUM
TO: Mayor Christine Maefsky and Scandia City Council
Neil Soltis, City Administrator
FROM: Andy Pratt, City Attorney
DATE: February 16, 2018
RE: Five-Year Street Reconstruction Plan
General Obligation Street Reconstruction Bonds
The purpose of this memorandum is to advise the Scandia City Council on the various issues
related to consideration and approval of a Five-Year Street Reconstruction Plan (2018-2022) (the
“Plan”) and the issuance of general obligation street reconstruction bonds, in the maximum
aggregate principal amount of $4,500,000 (the “Bonds”) to finance the street reconstruction
contemplated under the Plan. The Plan and the preliminary approval of the issuance and sale of
the Bonds will be on the City Council agenda at the February 20, 2018 meeting.
Preliminary Process
The Plan meets the requirements of Minnesota Statutes, Section 475.58, Subdivision 3b (the
“Act”). The Act authorizes the City to adopt a five-year street reconstruction plan and issue
general obligation street reconstruction bonds to finance the projects outlined in the Plan.
Issuance of the Bonds may be done without a voter referendum.
The Plan must be adopted after a public hearing thereon. Notice of the public hearing was
published in the Country Messenger on February 7, 2018. The public hearing should first be
opened to receive public testimony; the testimony should be limited to matters related to the Plan
and the proposed Bonds. After the public hearing is completed, the Council may discuss the
particulars of the Plan and the proposed Bonds, and then may move to approve the Plan and the
preliminary issuance of the Bonds. Approval of the Plan and the preliminary issuance of the
Bonds must be made via two-thirds vote of all Council members present.
Assuming the Plan and the preliminary issuance of the Bonds is approved by two-thirds vote, the
City must wait at least 30 days to issue the Bonds. The waiting period exists because the Act
allows residents to petition the City for a referendum on the issuance of the Bonds within this 30-
day window (the 30-day window begins at the close of the public hearing, so in this case it
would expire on March 20, 2018). If voters equal to five percent of the total votes cast during
the last City general election (i.e. 2016) submit a valid petition to the City Administrator within
this 30-day window, the City may not issue the Bonds until after receiving an affirmative vote at
a referendum. This is known as a “reverse referendum” process. The petition must meet
standard form requirements contained in the Minnesota Election Law.
Issuance of the Bonds
If no petition for a referendum is received, the City Council may approve the issuance and sale of
the Bonds at any time after March 22, 2018. Final approval of the Bonds has been scheduled for
the Council’s regular May 22, 2018 meeting. The Bonds will carry interest exempt from federal
and state income taxes, as the Bonds will be used to finance public infrastructure projects.
Closing on the Bonds is scheduled for June 19, 2018, at which time proceeds will be available
for the street projects.
You will note in the Plan and the accompanying resolution that the maximum principal amount
of the Bonds is set at $4,500,000. The City may always issue a lesser amount of Bonds, but it
cannot issue more, without redoing the public hearing process. Bond proceeds typically also pay
for costs of issuance, such as underwriter’s discount, rating agency fees, and legal fees. All of
these items will be finalized at the time the Bonds are priced in May.
Please let me know if you have any questions regarding this memorandum (651.351.2125;
apratt@eckberglammers.com). Pat Sweeney from my office will attend the February 20
meeting, as I have a personal conflict. I am pleased to be of service to the City of Scandia.