Archive for Wednesday, August 29, 2007

City Council Briefs

August 29, 2007

City urged to seek credit rating

Tom Calico of Springstead Inc., the city's financial adviser, presented details for the sale of general obligation bonds for the new public works building and general obligation sales tax bonds for the Tonganoxie pool project.

Calico said that he gave the city the option of being able to pay back the bond in eight years if the sales tax receipts are higher than his staff's conservative estimates.

He also spoke to the council about getting a credit rating for the city. The city has never received a credit rating. Calico said because the city was getting in the bond market more frequently, it would be advisable for the city to start getting a credit rating.

Calico said lenders are looking for greater security.

He said he has seen other lenders not bid for bonds because the cities were not rated. By getting a credit rating, the city could see more competitive bidders.

"The advantage to getting the rating is that you will be more attractive to out-of-state buyers. It's easy for them. Obviously whatever investment banks are considering bidding on your bond, they want to now something about your community. In state, they already know about your community. Out of state they don't know anything about the community. Having a rating expedites the process for them and makes you more attractive to competition."

To get the rating, the city would need to spend $10,000. Calico said of the three firms that give the ratings, Standard and Poors, Fitch and Moody's, he believes Moody's is more active and knows the Kansas City metropolitan area better. The cost of the rating was already built into the cost of issuing the bonds.

Each time the city would like to go out for a bond and get a credit rating it would need to renew the $10,000 fee.

Council member Steve Gumm asked if the council would start seeing a significant savings to justify the cost, but Calico said there were too many variables in comparing only two bonds and that after a few more bonds the city could start looking at any trends.

Moody's has given the city a preliminary estimate of its credit rating, in a range of AA2 and BAA2. Calico said that rating was good for a city the size of Tonganoxie. A more accurate rating would be given if the city decided to get the rating.

The council unanimously OK'd sale of the bonds.

Developer decries easement troubles

Jim Perry, who developed the Well Point subdivision, came to the council during the open agenda to discuss a construction project that had been built on city property.

"I'm not going to stand here and not take any of the blame for what happened. My stance is I'm not the only one who messed up," he said.

Perry built two homes that encroached on a city sewer easement. The 20-foot easement between the homes was created to allow space for an eight-inch sewer line that runs between the houses.

Perry argues that even with a 20-foot easement, it would have been difficult to get to the sewer line if something were to have happened.

Besides the city not being able to access the sewer line, Perry would also not be able to get a title on the homes because it is on city property.

One option is to move the sewer line, which would cost more than $17,000.

"The city really isn't in a dire strait here; it's the builder who can't get a title," said Butch Rodgers, city superintendent. "Probably the chances of anything happening to that sewer line, because it's new, I don't imagine any of us in this room will be here at that point in time, unless we have an earthquake or something. It's new line. It's all been put in properly, it will last 50 to a 100 years."

Brian Kingsley, of BG Consultants said vacating an extra six feet of easement would probably not make much of a difference since the city would already need to figure out a way to dig up the sewer in a 20-foot easement.

Mayor Mike Vestal tabled the issue until surveying could be done to determine how far the construction had encroached on city property.

City may change trash service

Further analysis of a contract could mean that the city may not have to contract with its refuse provider, Deffenbaugh Industries for 2008 and could mean the council could seek bids later this year for refuse service.

The existing contract does not have a rate for 2008, which City Attorney Mike Kelly believes may mean the city could get out of the last year of the contract. Deffen-baugh has written there would be an increase in service price from $10 to $11.95 a month. The letter also mentions Deffenbaugh "will no longer furnish houseline pickup unless residents are state handicap qualified."

The council will seek requests for proposals from refuse providers contingent on receipt of a letter from Deffen-baugh ending the contract.

Study funding OK'd

The city unanimously voted to spend the $2,912.40 needed for its share of a traffic impact study for U.S. Highway 24-40 and Eighth Street. The remainder of the $6,000 study would be paid by the Vintage Park developer. Vintage Park is a housing development going up on the city's southwest side.

Bitler's gets license

The council approved a cereal malt beverage license for Bitler's BBQ and Steak LLC 4-1. Council member Tom Putthoff voted against it.

Fourth Street Phase III revisions OK'd

The council unanimously approved revised plans for the third phase of the Fourth Street project. At a special meeting on Aug. 20, Brian Kingsley of BG Consultants revealed the new plans to the council. The next step is for staff to arrange a meeting with Fourth Street residents to discuss the newly revised plans.

Park to get shed

The council unanimously approved the building permit for an 8-by-10 garden shed to be built on city property on Magnatech Park. The shed is to be used by the city's master gardeners.

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