City council to weigh $2.7 million bond issuance at early meeting Monday

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The Perry City Council will meet at 5 p.m. Monday, Feb. 1, an hour earlier than usual, in order to give members and those attending a chance to reach their caucus locations in time.

Leaving themselves plenty of time to get to their caucus locations, the Perry City Council will meet at 5 p.m. Monday, an hour earlier than usual, in order to consider contracting for a revitalization plan for Perry and floating bonds for ongoing city improvements.

The revitalization plan would be drawn up by Simmering-Cory Inc., the Clear Lake-based urban planning and development company that conducted a blight assessment in November. The cost of the revitalization plan would not exceed $4,000, according to the resolution coming before the council Monday.

The city paid Simmering-Cory about $5,000 for the blight assessment.

The council is also expected to schedule a public hearing for Feb. 16, to be held during its regular meeting, in order to discuss the issuance of $2.7 million in general obligation bonds. The borrowed money will pay for the street resurfacing project planned for next summer, with the debt serviced from road use tax funds and local option sales tax funds.

Some of the money from the bond sale would also be used to refinance the city’s 2008 general obligation bond, and $525,000 will go toward the city’s portion of several ongoing improvement projects: the Willis Avenue bridge replacement, the First Avenue-Willis Avenue intersection redesign and the North Street extension between 16th and 18th streets.

Perry Finance Officer Susie Moorhead has been busy for several weeks compiling a proposed city budget for fiscal year 2017, which starts July 1. The council met at 8 a.m. Thursday for a budget work session and learned from Moorhead that general fund revenues are projected to be $3,341,679 for next year, an increase of 3 percent on 2016 revenues.

The property tax levy rate is expected to see a modest increase of 1.611 cents per $1,000 of taxable valuation, a rise to $17.89144 from last year’s $17.87533.

Heads of city departments with a lively interest in the council's budget deliberations include, from left, Perry Chief of Police Eric Vaughn, Perry Public Works Director Jack Butler and Perry Public Library Director Mary Murphy.
Heads of city departments with a lively interest in the council’s budget deliberations include, from left, Perry Chief of Police Eric Vaughn, Perry Public Works Director Jack Butler and Perry Public Library Director Mary Murphy.

Fiscal year 2017 expenditures are projected to be $3,340,184. Moorhead and Perry City Administrator Sven Peterson have held their first round of budget work sessions with the heads of the city’s seven service departments:┬ápublic safety, public works, health and social services, culture and recreation, community and economic development, business-type activities and general government.

A second round of budget-trimming department-head work sessions will begin this week, and the council will have a second work session next week. A public hearing on the proposed 2017 budget will likely be held Feb. 16.

At Thursday’s work session, a┬ápresentation on the city’s borrowing capacity and its prospects for funding future projects through debt financing was provided to the council by Jenny Blankenship and Owen Gerard, accountants at Public Financial Management Inc. (PFM).

Blankenship, PFM director, explained how the bonds would be serviced by future revenues from several sources.

Jenny Blankenship, director of Des Moines-based Public Financial Management Inc., spoke to the Perry City Council Thursday morning about a proposed $2.7 million bond issuance.
Jenny Blankenship, director of Des Moines-based Public Financial Management Inc., spoke to the Perry City Council Thursday morning about a proposed $2.7 million bond issuance.

“Even though there’s local option sales tax and road use tax in the revenue stream every year,” Blankenship said, “all of that revenue isn’t available today, so that’s why we’re still going to issue bonds for the total amount of these projects. We’re just going to use different income sources over the life of the bonds to pay for them.”

“It’s actually good for a city to have a certain amount of debt,” Perry Mayor Jay Pattee said. When a city carries no debt, “it eliminates you for consideration on a lot of grants,” he said.

Blankenship agreed that moderate debt, in amounts well below the city’s legal capacity, is crucial to growth.

“With some of these projects, if you’re not incurring any debt, you’re almost setting your city up for failure and for no growth,” she said. “You guys have a great community. You need to see that you’re keeping up on those projects and keeping it a great community. Sometimes there’s just not enough inflow in one year to pay for a whole road overlay.”

That is when issuing bonds makes sense, she said.

“On the flip side, if you’re in a community that’s not growing significantly, you probably don’t want to borrow up to the 100 percent capacity of what you have because if there’s an emergency — a road has to be fixed or something happens to it — you need to leave yourself a little bit of flexibility for those things.”

PFM will be paid $15,000 for assisting the city in issuing the bonds. The Perry City Council will decide whether to enter an agreement with PFM at its 5 p.m. Monday meeting in the Clarion Room of the Security Bank Building at 1102 Willis Ave.

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