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Sales Tax Increment Revenue Bonds_Flood Mitigation Program_$29MMasterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager Dubuque band AI- America City 1 2007 • 2012 • 2013 SUBJECT: Proceedings for Public Hearing on the Issuance of Not to Exceed $29,000,000 Sales Tax Increment Revenue Bonds (Flood Mitigation Program) DATE: February 11, 2014 Financing Director Ken TeKippe is providing the suggested proceedings for the public hearing on the proposed issuance of Sales Tax Increment Revenue Bonds prepared by the City's Bond Counsel and recommends the City Council adopt the "Resolution Fixing Date of a Meeting on the Proposition of the Issuance of Not to Exceed $29,000,000 Sales Tax Increment Revenue Bonds." The proceeds of the Bonds will be used to provide funds to pay costs of carrying out the Bee Branch flood mitigation projects. I concur with the recommendation and respectfully request Mayor and City Council approval. MCVM:jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Teri Goodmann, Assistant City Manager Kenneth J. TeKippe, Finance Director THE CITY OF Dui Masterpiece on the Mississippi Dubuque trati M- America City �1111� 2007 • 2012 • 2013 TO: Michael C. Van Milligen, City Manager FROM: Kenneth J. TeKippe, Finance Director DATE: February 11, 2014 SUBJECT: Proceedings for Public Hearing on the Issuance of Not to Exceed $29 D00,000 Sales Tax Increment Revenue Bonds (Flood Mitigation Program) INTRODUCTION The purpose of this memorandum is to provide the suggested proceedings for the public hearing on the proposed issuance of Sales Tax Increment Revenue Bonds prepared by our Bond Counsel and to present a resolution for City Council to adopt entitled "Resolution Fixing Date of a Meeting on the Proposition of the Issuance of Not to Exceed $29,000,000 Sales Tax Increment Revenue Bonds." The proceeds of the Bonds will be used to provide funds to pay costs of carrying out the Bee Branch flood mitigation projects as authorized by Sections 418.14 and 384.83 of the Code of Iowa. A letter from attorney William Noth detailing information on the bond hearing is enclosed. BACKGROUND The State of Iowa Flood Mitigation Program was created in 2012 establishing a Flood Mitigation Sales Tax Increment Fund. The Sales Tax Increment Fund is to consist of the increase in the state share of the sales tax revenues from communities with qualifying applications. The maximum state share of sales tax increment that can be diverted from the state sales tax general fund and used for flood mitigation projects is $30 million a year. The maximum award for any qualifying single community is $15 million per year. To qualify for sales tax increment funding, federal financial assistance must have been secured for the project. The state sales tax increment cannot exceed 50% of the total project cost, so a local match is required to be pledged in the amount that federal financial assistance fell short of 50% of the total project cost. In April of 2013 the State Flood Mitigation Program Board was established. The State of Iowa Flood Mitigation Program Board approved $98,494,178 in state sales tax increment funding for the Bee Branch Watershed Flood Mitigation Project in December 2013. The Sales Tax Increment Revenue Bonds will allow the City of Dubuque to continue and complete construction on the Bee Branch Creek, replace the flood gates and construct other elements outlined in the Bee Branch Watershed Flood Mitigation Project. The Executive Summary of the Bee Branch Flood Mitigation Project application submitted to the State Flood Mitigation Program Board is attached for more information. This is the first bond of its kind being sold in the Iowa market. Financing for the project was reviewed by the City's financial advisor, Piper Jaffray. The City has also selected an underwriter, R.W. Baird. The selected underwriter will be providing suggestions with respect to structure, timing and marketing of the bonds being sold in order to sell the bonds with the best possible structure and at the lowest interest cost. The bonds shall be payable from the City's flood project fund established under Iowa Code Section 418.12, into which there shall be deposited sales tax increment revenues received from the State of Iowa as part of the award to the City under the Flood Mitigation Program, and to the extent necessary and provided for in the resolution authorizing issuance of said Bonds, funds collected by the City from a supplemental levy of debt service taxes. DISCUSSION The proceedings are prepared to show as a first step the receipt of any oral or written objections from any resident or property owner to the proposed action of the Council to issue the Bonds. A summary of objections received or made, if any, should be attached to the proceedings. After all objections have been received and considered if the Council decides not to abandon the proposal to issue the Bonds, a form of resolution follows that should be introduced and adopted, entitled "Resolution Instituting Proceedings to Take Additional Action for the Issuance of not to exceed $29,000,000 Sales Tax Increment Revenue Bonds." The Council is required by statute to adopt the resolution instituting proceedings to issue the Bonds at the hearing — or an adjournment thereof. If necessary to adjourn, the minutes are written to accommodate that action. In the event of the Council decides to abandon the proposal to issue said Bonds, then the form of resolution included in said proceedings should not be adopted. We would suggest that, in this event, a motion merely be adopted to the effect that such bond proposal is abandoned. ACTION TO BE TAKEN I respectfully recommend the City Council hold the public hearing and approve instituting proceedings to take additional action. Prepared by: KT/eml Attachments cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Jennifer Larson, Budget Director Masterpiece on the Mississippi Bee Branch Watershed Flood Mitigation Project Executive Summary Imagine: you and your family are waiting out a tornado warning in the safety of your basement when suddenly heavy rains produce flash flooding and floodwaters start pouring in around you. Your choice: do you stay in your flooding basement or go upstairs and risk the tornado? Unfortunately, Bee Branch Watershed residents have been faced with this dire situation repeatedly. The Bee Branch Watershed, which includes Dubuque's most developed areas where over 50% of Dubuque's residents either live or work, is continually hit hard with flash flooding — and it's NOT just a little water in the basement. It's flooding that inundates water heaters, furnaces, and electrical boxes; it rushes down streets from curb to curb -- stalling vehicles, stranding motorists, blowing sewer covers, and ripping up pavement. Six Presidential Disasters directly impacting the watershed have been issued between 1999 and 2011 due to flash flooding, with estimated damages of $69.8 million. The Bee Branch Watershed encompasses historic neighborhoods offering some of the community's most affordable workforce housing. Most residents are working families, many are elderly -- those least able to recover from repetitive flood loss. For over a decade, businesses and homes have suffered losses from water damage and disinvestment. From 2004 to 2009, commercial property values grew by 39% citywide — but fell by 6% in the flood prone area. In response, the City has engaged consultants, state and federal partners, citizen advisory committees, and the general public to help create, fund, and implement a watershed plan to address the flooding. The plan outlines improvements throughout the Bee Branch Watershed, improvements that will benefit upstream as well as downstream properties, a plan consistent with both the Dubuque County Multi- Jurisdictional Hazard Mitigation Plan and the Dubuque County Comprehensive Emergency Management Plan. The Bee Branch Watershed Flood Mitigation Project is a multi - phased, fiscally responsible investment. It reflects a holistic approach to mitigate flooding as it will also improve water quality, stimulate investment, and enhance the quality of life. Having secured the necessary federal and state funding approvals, permits, and funding, Dubuque has pushed forward with planning, execution, and completion of three phases and the initiation of two more. The phases of the Bee Branch Watershed Flood Mitigation Project are as follows: Phase Description arter Road Detention Basin West 32 "d Street Detention Basin Historic Millwork District; 4 Lower Bee Branch Creek Restoration Flood Mitigation Gate Replacement Surface Reduction Upper Bee Branch Creek Restoration 22nd Street Storm Sewer Improvements Flood Mitigation Maintenance Facility North End Storm Sewer Improvements 11 Water Plant Flood Protection 12 17th Street Storm Sewer Improvements Status Complete Complete Complete Under Construction Under Design Under Construction Under Design Under Design Under Design Under Design Under Design Under Design Bee Branch Watershed Flood Mitigation Project - Executive Summary Individually, the 12 phases of the project may provide some benefit. But flash flooding can be expected to occur until all of the improvements are implemented. But it is also true that with the completion of each subsequent phase, the threat of flash flood damage is lessened and the resulting damage will be mitigated. Because of the public support for the Bee Branch Watershed Flood Mitigation Project, the stated commitment of the City of Dubuque City Council to implement the various phases of the project, and because the City has already started implementing some of the improvements, non - public investment in the Bee Branch Watershed has already eclipsed $139 million since 2008 with an additional $215 million expected to follow in the next five years for a combined total of $354 million in non - public investment. Implementation of the complete Bee Branch Watershed Flood Mitigation Project is possible only with the requested Sales Tax Increment funding. The City of Dubuque has been fortunate to secure local, state, and federal financial assistance to the extent that the Bee Branch Watershed Flood Mitigation Project is eligible for funding through the State Flood Mitigation Program. The total commitment in the combination of local and federal funding will provide for 51% of the total project cost. The City has secured more than the requisite $30 million in federal financial assistance, with $49 million in financial assistance through the federal Clean Water Act and $1.2 million U.S. Economic Development Administration disaster relief grant, which is a federal program providing assistance specifically for hazard mitigation. And yet, even with the existing outside financial assistance, the cost of implementing all phases of the flood mitigation project is too steep for Dubuque citizens and businesses. Of the more than 30 stormwater utilities across Iowa, Dubuque residents currently pay the second highest rate in the state. And even with the requested Sales Tax increment, a rate increase is necessary. But to construct the Bee Branch Watershed Flood Mitigation Project without the requested Sales Tax Increment, the rate would need to be increased by 248% which would significantly burden Dubuque businesses. The City of Dubuque has carefully developed a fiscally conservative funding plan for the multi - phased project. The City is requesting less than $7 million in sales tax increment in any given year, with an average annual request of less than $5 million. The requested $98 million in Sales Tax Increment over 20 years is less than 59% of the City's projected 70% increment. State Flood Mitigation Board approval of the City of Dubuque's Project by December 31, 2013 is critical. Timely approval will benefit the lives of thousands of watershed residents, businesses and employees, as well as halt the disinvestment occurring in the watershed. If approval is delayed until 2014, however, the projected sales tax increment would be negatively impacted and the City may need to adjust the timing of project phases. The Bee Branch Watershed Flood Mitigation Project will prevent an estimated $582 million in damages over the 100 -year design life of the project, with a return on investment for the State of Iowa of $6.00 for each $1.00 spent! ii AHLERS COONEY, P.C. 100 COURT AVENUE, SUITE. 600 DES MOINES, IOWA 50309 -2231 PHONE: 515- 243 -7611 FAX: 515- 243 -2149 WWW.AHLERSLAW.COM William J. Noth wnoth @ahlerslaw.com February 5, 2014 Mr. Ken TeKippe Finance Director City of Dubuque 50 West 13th Street Dubuque, Iowa 52001 -4864 RE: Not to exceed $29,000,000 Sales Tax Increment Revenue Bonds Dear Mr. TeKippe: Direct Dial: (515)246 -0332 With this letter I am enclosing suggested proceedings to be acted upon by the Council on the date fixed for the hearing (February 17th) on the issuance of the above mentioned Bonds, pursuant to the provisions of Code Sections 418.14 and 384.83. A certificate to attest the proceedings is also enclosed. The proceedings are prepared to show as a first step the receipt of any oral or written objections from any resident or property owner to the proposed action of the Council to issue the Bonds. A summary of objections received or made, if any, should be attached to the proceedings. After all objections have been received and considered if the Council decides not to abandon the proposal to issue the Bonds, a form of resolution follows that should be introduced and adopted, entitled "Resolution Instituting Proceedings to Take Additional Action for the Issuance of not to exceed $29,000,000 Sales Tax Increment Revenue Bonds." The Council is required by statute to adopt the resolution instituting proceedings to issue the Bonds at the hearing -- or an adjournment thereof. If necessary to adjourn, the minutes are written to accommodate that action. In the event the Council decides to abandon the proposal to issue said Bonds, then the form of resolution included in said proceedings should not be adopted. We would suggest that, in this event, a motion merely be adopted to the effect that such bond proposal is abandoned. WISHARU & BAILY - 1888; GUERNSEY & BAILY - 1893; BAILY & STIPP - 1901; STIPP, PERRY, BANNISTER & STAR7II4GER - 1914; BANNISTER, CARPENTER, AHLERS & COONEY - 1950; AHLERS, COONEY. DORWEILER, ALLBEE, HAYNIE & SMITH - 1974; AHLERS, COONEY, DORWEILER, HAYNIE, SMITH & ALLBEE, P.C. - 1990 February 5, 2014 Page 2 Section 384.83 of the Code of Iowa provides that any resident or property owner of the City may appeal the decision to take additional action to issue the Bonds, to the District Court of a county in which any part of the City is located, within 15 days after such additional action is taken, but that the additional action is final and conclusive unless the court finds that the Council exceeded its authority. In the event an appeal is filed by any resident or property owner, please see that we are notified immediately; and, as soon as available, a copy of the notice of appeal should be furnished our office for review. . Also enclosed is an extra copy of the proceedings to be filled in as the original and certified back to this office. If you have any questions pertaining to the proceedings enclosed or this letter, please do not hesitate to either write or call. Very truly yours, William J. Noth FOR THE FIRM WJN:dc Encl. cc: Barry Lindahl (w /encl.) Jenny Larson (w /encl.) Tim Oswald (w /encl.) 00996057 -1 \10422 -148 (This Notice to be posted) NOTICE AND CALL OF PUBLIC MEETING Governmental Body: The City Council of Dubuque, Iowa. Date of Meeting: February 17 , 2014. Time of Meeting: 6:30 o'clock P .M. Place of Meeting: Historic Federal Building, 350 West 6th Street, Dubuque, Iowa. PUBLIC NOTICE IS HEREBY GIVEN that the above mentioned governmental body will meet at the date, time and place above set out. The tentative agenda for said meeting is as follows Not to exceed $29,000,000 Sales Tax Increment Revenue Bonds Public hearing on the issuance. Resolution instituting proceedings to take additional action. Such additional matters as are set forth on the additional 4 page(s) attached hereto. (number) This notice is given at the direction of the Mayor pursuant to Chapter 21, Code of Iowa, and the local rules of said governmental body. City C r c, Dubuque, Io February 17, 2014 The City Council of Dubuque, Iowa, met in regular session, in the Historic Federal Building, 350 West 6th Street, Dubuque, Iowa, at 6:30 o'clock P.M., on the above date. There were present Mayor Roy D. Buol in the chair, and the following named Council Members: Karla Braig, Joyce Connors, Ric Jones, Kevin Lynch, David Resnick, Lynn Sutton Absent: 1 The Mayor announced that this was the time and place for the public hearing and meeting on the matter of the issuance of not to exceed $29,000,000 Sales Tax Increment Revenue Bonds in order to provide funds to pay costs of the acquisition, construction and installation and equipping of the Bee Branch Watershed Flood Mitigation Project, including those costs associated with the Lower Bee Branch Creek Restoration Project (Phases 4 and 7) and the Bee Branch Flood Control Pumping Station Gates Replacement Project, and that notice of the proposed action by the Council to institute proceedings for the issuance of said Sales Tax Increment Revenue Bonds had been published pursuant to the provisions of Section 384.83 of the Code of Iowa. The Mayor then asked the Clerk whether any written objections had been filed by any City resident or property owner to the issuance of said Sales Tax Increment Revenue Bonds. The Clerk advised the Mayor and the Council that -0- written objections had been filed. The Mayor then called for oral objections to the issuance of said Sales Tax Increment Revenue Bonds and -0- were made. Whereupon, the Mayor declared the time for receiving oral and written objections to be closed. (Attach here a summary of objections received or made, if any) The Council then considered the proposed action and the extent of objections thereto. Whereupon, Council Member Jones introduced and delivered to the Clerk the Resolution hereinafter set out entitled "RESOLUTION INSTITUTING PROCEEDINGS TO TAKE ADDITIONAL ACTION FOR THE ISSUANCE OF NOT TO EXCEED $29,000,000 SALES TAX INCREMENT REVENUE BONDS," and moved its adoption. Council Member Connors seconded the motion to adopt. The roll was called and the vote was, AYES: Resnick, Sutton, Braig, Buol, Connors, Jones, Lynch NAYS: Whereupon, the Mayor declared said Resolution duly adopted as follows: RESOLUTION NO. 45-14 RESOLUTION INSTITUTING PROCEEDINGS TO TAKE ADDITIONAL ACTION FOR THE ISSUANCE OF NOT TO EXCEED $29,000,000 SALES TAX INCREMENT REVENUE BONDS WHEREAS, pursuant to notice published as required by law, this Council has held a public meeting and hearing upon the proposal to institute proceedings for the issuance of not to exceed $29,000,000 Sales Tax Increment Revenue Bonds for the purpose of pay costs of the acquisition, construction and installation and equipping of the Bee Branch Watershed Flood Mitigation Project, including those costs associated with the Lower Bee Branch Creek Restoration Project (Phases 4 and 7) and the Bee Branch Flood Control Pumping Station Gates Replacement Project, and has considered the extent of objections received from residents or property owners as to said proposed issuance; and, accordingly the following action is now considered to be in the best interests of the City and residents thereof: NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That this Council does hereby institute proceedings and takes additional action for the sale and issuance in the manner required by law of not to exceed $29,000,000 Sales Tax Increment Revenue Bonds for the foregoing purposes. 3 Section 2. The City Manager, Budget Director and Finance Director are authorized and directed to proceed on behalf of the City with the negotiation of the terms of said Bonds, to select a date for the Council's approval thereof, to cause to be prepared such notice and sale information as may appear appropriate, to publish and distribute the same on behalf of the City and this Council and otherwise to take all action necessary to permit the sale of said Bonds on a basis favorable to the City and acceptable to the Council. PASSED AND APPROVED this 17th day of February, 2014. ATTEST: 4 STATE OF IOWA COUNTY OF DUBUQUE CERTIFICATE ) SS CIG -3 I, the undersigned City Clerk of Dubuque, Iowa, do hereby certify that attached is a true and complete copy of the portion of the corporate records of said Municipality showing proceedings of the Council, and the same is a true and complete copy of the action taken by said Council with respect to said matter at the meeting held on the date indicated in the attachment, which proceedings remain in full force and effect, and have not been amended or rescinded in any way; that meeting and all action thereat was duly and publicly held in accordance with a notice of meeting and tentative agenda, a copy of which was timely served on each member of the Council and posted on a bulletin board or other prominent place easily accessible to the public and clearly designated for that purpose at the principal office of the Council (a copy of the face sheet of said agenda being attached hereto) pursuant to the local rules of the Council and the provisions of Chapter 21, Code of Iowa, upon reasonable advance notice to the public and media at least twenty-four hours prior to the commencement of the meeting as required, by said law and with members of the public present in attendance; I further certify that the individuals named therein were on the date thereof duly and lawfully possessed of their respective city offices as indicated therein, that no Council vacancy existed except as may be stated in said proceedings, and that no controversy or litigation is pending, prayed or threatened involving the incorporation, organization, existence or boundaries of the City or the right of the individuals named therein as officers to their respective positions. WITNESS my hand and the seal of said Municipality hereto affixed this 18th day of February, 2014. City Cler ubuque, ROLL CALL ORDER FOR MEETING OF 2/17/2014 Resnick, Sutton, Braig, Buol, Connors, Jones, Lynch CITY OF DUBUQUE, IOWA CITY COUNCIL MEETING Historic Federal Building 350 W. 6th Street February 17, 2014 Council meetings are video streamed live and archived at www.citvofdubuque.ora/media and on Dubuque's CityChannel on the Mediacom cable system at Channel 8 (analog) and 85.2 (digital). WORK SESSION 5:00 PM Environmental Stewardship Advisory Commission - Hydraulic Fracturing Report ESAC Hydraulic Fracturing Report, Appendix 1- Public Comments, Appendix 2- EPA Progress Report, Appendix 3- List of Articles & Websites Petition from the Sisters of the Presentation 2/14114 REGULAR SESSION 6:30 PM PLEDGE OF ALLEGIANCE PROCLAMATION(S) 1. Problem Gambling Awareness Month (March 2014) Problem Gambling Awareness Proclamation PRESENTATION(S) 1. Environmental Protection Agency (EPA) Smart Growth Award Assistant City Manager Teri Goodmann to present the EPA Smart Growth Achievement Award - Corridor or Neighborhood Revitalization category for the Historic Millwork District and Washington Neighborhood EPA Congratulatory Letter IEDA Congratulatory Letter Changed CONSENT ITEMS The consent agenda items are considered to be routine and non -controversial and all consent items will be normally voted upon in a single motion without any separate discussion on a particular item. If you would like to discuss one of the Consent Items, please go to the microphone and be recognized by the Mayor and state the item you would like removed from the Consent Agenda for separate discussion and consideration. 1. Minutes and Reports Submitted Arts and Cultural Affairs Advisory Commission of 12/17/13; City Council proceedings of 2/3, 2/10; Civic Center Advisory Commission of 1/27; Historic Preservation Commission of 1/16; Historic Preservation Education Task Force of 2/6; Investment Oversight Advisory Commission of 1/22; Library Board of Trustees of 12/19/13; Long Range Planning Advisory Commission of 1/15; Zoning Advisory Commission of 2/5; Proof of Publication for City Council proceedings of 1/21; Proof of Publication for List of Claims/Summary of Revenues for month ended 12/31/13 Suggested Disposition: Receive and File Arts Commission 12/17/13 Council Proceedings 2/3 Council Proceedings 2/10 Council Proceedings 2/12 Civic Center 1/27 Historic Preservation 1/16 Historic Preservation ETF 2/6 Investment Oversight 1/22 Library Board 12/19/13 Lona Range Planning 1/15 Zoning Advisory 2/5 Proof - Council Proceedings 2/3 Proof - List of Claims/Revenues 12/31/13 2. Notice of Claims and Suits Scott Duehr for vehicle damage, Zachary Gries for property damage, Jerry Grutz for property damage, Kischel Harris for personal injury and property damage (2), Jeffrey Herbst for vehicle damage, Mary Heister/State Farm Mutual for vehicle damage, Mark Matel for vehicle damage, Jason McCann for vehicle damage, James Pancratz for vehicle damage, Michael Pancratz for vehicle damage, Ann Powell for vehicle damage, James Thill for vehicle damage; Jeff Tracy for vehicle damage Suggested Disposition: Receive and File; Refer to City Attorney Pg. 1