V.1. Public Hearing for the Purposes of Accepting Input on the 2019-2023 Five-Year Capital Improvement Plan as it Relates to the Funding of Capital Improvements to City Hall; Bishop
January 2, 2018 Council Report 2019-005
PUBLIC HEARING FOR THE PURPOSES OF ACCEPTING INPUT ON THE
2019-2023 FIVE-YEAR CAPITAL IMPROVEMENT PLAN AS IT RELATES
TO THE FUNDING OF CAPITAL IMPROVEMENTS TO CITY HALL
Proposed Action
To open the public hearing, accept public input on the 2019-2023 Five-Year Capital Improvement Plan (CIP) as it
relates to the funding Capital Improvements to City Hall.
Staff recommends approval of the following motion. Approve Resolution 2019-002 Adopting a Capital Improvement
Plan and Providing Preliminary Approval for the Issuance of Bonds Thereunder.
Overview
Under Minnesota Law cities are allowed to issue municipal bonds under a capital improvement plan without the usual
referendum requirements for city halls, public works and public safety facilities. They are subject to a reverse
referendum described in the CIP. The law authorizes the issuance of obligations for capital improvements if the bonds
are issued under a 5-year capital improvement plan. To qualify for this option several qualifications must be met,
among which is to approve the capital improvement plan after a public hearing and the capital improvement being
financed must have a useful life of at least 5 years.
The CIP includes one project, to renovate City Hall. City Hall has not been remodeled or upgraded since 1989. Work
space and facility needs have changed significantly since that time. Upgrades will include reconfiguring internal
space for better layout, providing a wellness room, expand front entry for a more welcoming entrance, replacement of
windows, electric panels and roof. City Hall updates will help deliver services to a changing community and help
attract and retain a quality workforce.
The plan calls for CIP Bonds to be issued in the maximum principal amount of $6,000,000 paid over a 16-year term.
The most recent estimated project cost is $4,614,930. This is the first step towards issuing bonds. City Council
authorization is required for final issuance and exact amount, which cannot exceed $6,000,000.
Supporting Information
• Resolution 2019-002
• 2019-2023 CIP as it relates to the funding of capital improvements to City Hall
______________________________________
Nick Bishop, CPA
Finance Director
CITY OF HOPKINS, MINNESOTA
RESOLUTION NO. 2019-002
ADOPTING A CAPITAL IMPROVEMENT PLAN AND
PROVIDING PRELIMINARY APPROVAL FOR THE ISSUANCE
OF BONDS THEREUNDER
WHEREAS, pursuant to Minnesota Statutes, Section 475.521, as amended (the “Act”), cities are
authorized to adopt a capital improvement plan and carry out programs for the financing of capital
improvements; and
WHEREAS, the City of Hopkins, Minnesota (the “City”), has caused to be prepared the “2019
through 2023 Five-year Capital Improvement Plan for the City of Hopkins, Minnesota” (the “Capital
Improvement Plan”); and
WHEREAS, on the date hereof, the City Council of the City (the “Council”) conducted a duly
noticed public hearing regarding adoption of the Capital Improvement Plan pursuant to the requirements of
the Act and the issuance of one or more series of general obligation bonds thereunder in a maximum principal
amount of $6,000,000 to finance various capital improvements to the City Hall within the City; and
WHEREAS, in considering the Capital Improvement Plan, the Council has considered for each
project and for the overall Capital Improvement Plan:
1. the condition of the City’s existing infrastructure, including the projected need
for repair and replacement;
2. the likely demand for the improvement;
3. the estimated cost of the improvement;
4. the available public resources;
5. the level of overlapping debt in the City;
6. the relative benefits and costs of alternative uses of the funds;
7. operating costs of the proposed improvements; and
8. alternatives for providing services more efficiently through shared facilities with
other local government units.
NOW, THEREFORE, BE IT RESOLVED BY the City Council of the City of Hopkins, Hennepin
County, Minnesota, as follows:
1. The Capital Improvement Plan is hereby approved.
2. City staff are hereby authorized to do all other things and take all other actions as may be
necessary or appropriate to carry out the Capital Improvement Plan in accordance with any applicable laws
and regulations.
3. The City gives preliminary approval to the issuance of the bonds in the maximum principal
amount of $6,000,000, provided that if a petition requesting a vote on issuance of the bonds, signed by voters
equal to five percent (5%) of the votes cast in the last general election, is filed with City Clerk by
January 18, 2019, the City may issue the bonds only after obtaining approval of a majority of voters voting on
the question at an election.
548153v1 JAE HP110-100 2
Approved by the City Council of the City of Hopkins, Minnesota this 2nd day of January, 2019.
Molly Cummings, Mayor
ATTEST:
Amy Domeier, City Clerk
2019 through 2023
Five-Year Capital Improvement Plan for the
City of Hopkins, Minnesota
January 2, 2019
Prepared by:
Ehlers & Associates, Inc.
3060 Centre Pointe Drive
Roseville, MN 55113
Ehlers & Associates, Inc. Page 2
Table of Contents
I. INTRODUCTION ...................................................................... 3
II. PURPOSE .............................................................................................4
III. THE CAPITAL IMPROVEMENT PLANNING PROCESS ..............5
IV. PROJECT SUMMARY ........................................................................7
V. FINANCING THE CAPITAL IMPROVEMENT PLAN ....................11
PROPOSED CIP BOND ISSUES ................................... APPENDIX A
PRE-SALE SCHEDULE ................................................. APPENDIX B
NOTICE OF PUBLIC HEARING .................................. APPENDIX C
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City of Hopkins
Five-Year Capital Improvement Plan
2019 through 2023
I. INTRODUCTION
In 2003, the Minnesota State Legislature adopted a statute (Section 475.521,
referred to herein as the “CIP Act”) that allows cities to issue municipal
bonds under a capital improvement plan without the usual referendum
requirement (except for the so-called “reverse referendum” described
below). The CIP Act applies to capital improvements consisting of city
halls, public works, and public safety facilities. The 2005 Legislature added
towns to the meaning of a municipality and town halls and libraries to the
meaning of a capital improvement under the CIP Act.
Throughout this plan, the term “capital improvement” refers only to those
improvements identified in the CIP Act, as summarized above. Capital
expenditures for other public improvements in the City will be financed
through other means, and are not governed by this plan.
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II. PURPOSE
A capital improvement is a major expenditure of municipal funds for the
acquisition or betterment to public lands, buildings, or other improvements
used as a city hall, town hall, library, public safety, or public works facility,
which has a useful life of 5 years or more. For the purposes of the CIP Act,
capital improvements do not include light rail transit or related activities,
parks, road/bridges, administrative buildings other than city or town hall, or
land for those facilities. A Capital Improvement Plan (“CIP”) is a document
designed to anticipate capital improvement expenditures and schedule them
over a five-year period so that they may be purchased in the most efficient
and cost-effective method possible. A CIP allows the matching of
expenditures with anticipated income. As potential expenditures are
reviewed, the municipality considers the benefits, costs, alternatives and
impact on operating expenditures.
The City of Hopkins, Minnesota (the “City”) believes the capital
improvement process is an important element of responsible fiscal
management. Major capital expenditures can be anticipated and coordinated
so as to minimize potentially adverse financial impacts caused by the timing
and magnitude of capital outlays. This coordination of capital expenditures
is important to the City in achieving its goals of adequate physical assets and
sound fiscal management. In these financially difficult times good planning
is essential for the wise use of limited financial resources.
The Capital Improvement Plan is designed to be updated on an annual basis.
In this manner, it becomes an ongoing fiscal planning tool that continually
anticipated future capital expenditures and funding sources.
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III. THE CAPITAL IMPROVEMENT PLANNING PROCESS
The process begins with analysis of the City’s five-year capital improvement
needs and funding sources. The City may solicit input from citizens and
other governmental units at an early stage, if desired.
The City Council then directs staff or consultants to prepare a plan that sets
forth the estimated schedule, timing and details of specific capital
improvements by year, together with the estimated cost, the need for the
improvement, and the sources of revenue for the improvement. The City
Council then holds a public hearing on the CIP, with notice published not
more than 30 days and not less than seven days for the hearing (except as
described below). The Council may either approve the CIP immediately
after the hearing, or based on input may make revisions and approve the CIP
at a later meeting.
If the CIP calls for general obligation bonds to finance certain
improvements, the City Council must follow an additional set of procedures.
The Council must hold a public hearing regarding issuance of the bonds.
Notice of such hearing must be published in the official newspaper of the
municipality at least 14, but not more than 28 days prior to the date of the
public hearing. In addition, the notice may be posted on the City’s official
web site. (The public hearings on the CIP and the bonds may be combined
into a single hearing, in which case the notice requirements for bonds must
be followed.)
The Council must approve the sale of CIP bonds by a 3/5ths vote of its
membership. However, the bonds are subject to a so-called “reverse
referendum:” if a petition signed by voters equal to at least five percent of
the votes cast in the City in last general election is filed with the City Clerk
within 30 days after the public hearing regarding the bonds, the bonds may
not be issued unless approved by the voters (by a majority of those voting on
the question). Further, the maximum debt service in any year on all
outstanding CIP Bonds is .16% of the estimated market value of property in
the city, using the market value for the taxes-payable year in which the
bonds are issued.
After the CIP has been approved and bonds have been authorized, the City
works with its municipal advisor to prepare a bond sale and repayment
schedule. Assuming no petition for a referendum is filed, the bonds are sold,
and when proceeds from the sale of the bonds (and any other identified
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revenue sources) become available, the expenditures for specified capital
improvements can be made.
In subsequent years, the process is repeated as expenditures are completed
and as new needs arise. Capital improvement planning looks five or more
years into the future from the date of the CIP.
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IV. PROJECT SUMMARY
The expenditures to be undertaken with this CIP are limited to those listed
below. All other foreseeable capital expenditures within the municipal
government will come through other means. The following expenditures
have been submitted for inclusion in this CIP:
2019 Expenditures
• Capital improvements to City Hall
2020 Expenditures
• None contemplated at this time
2021 Expenditures
• None contemplated at this time
2022 Expenditures
• None contemplated at this time
2023 Expenditures
• None contemplated at this time
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The CIP Act requires the City Council to consider eight factors in preparing
the CIP:
1. Condition of the City’s existing infrastructure, including projected need
for repair or replacement.
2. Likely demand for the improvement.
3. Estimated cost of the improvement.
4. Available public resources.
5. Level of overlapping debt in the City.
6. Relative benefits and costs of alternative uses of funds.
7. Operating costs of the proposed improvements.
8. Alternatives for providing services most efficiently through shared
facilities with other cities or local governments.
The City has considered the eight points as they relate to capital
improvements City Hall through the issuance of CIP Bonds. The findings
are as follows:
PROJECTS
Conditions of City Infrastructure and Need for the Projects
The City Hall has not been remodeled or updated since 1989 (nearly 30
years). Work space and facility needs have changed significantly since that
time. The City intends to update City Hall to provide office space for
Directors that currently do not have private office space, reconfigure internal
space for better layout, provide a wellness room, expand the front entry to
provide a more welcoming entrance, updating the lighting for efficiencies,
replacement of windows, electrical panel and roof and, overall remodeling to
update the interior finishes to retain and attract employees.
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Demand for Projects
The City has a responsibility to deliver services that provide for the safety,
health, and welfare of residents and their property. To serve residents and to
do their jobs efficiently and safely, City employees need adequate facilities.
The City hasn’t reinvested in the existing facility for nearly 30 years and it is
old and dated from both a layout and aesthetic perspective. To keep up with
modern amenities found in many new office facilities, the City wants to
update City Hall in order to retain and attract quality employees in the
current and future competitive job market. In addition, the City needs to
replace the windows and roof due to age and condition.
Estimated Cost of the Project
The estimated cost of the capital improvements for City Hall is up to
$6,000,000.
Availability of Public Resources
The City plans to fund the project through the issuance of up to $6,000,000
in General Obligation Bonds.
Level of Overlapping Debt
Taxing District
2017/2018
Adjusted Taxalbe
Net Tax Capacity
% in City Total GO Debt
City's
Proprotionate
Share
Hennepin County $1,813,226,093 1.1747%$950,945,000 $11,170,751
ISD No. 270 (Hopkins)119,587,184 17.7832%162,430,000 28,885,252
ISD No. 283 (St. Louis Park)65,066,687 0.5036%122,140,000 615,097
Metropolitan Council 3,971,779,581 0.5437%148,045,000 804,921
Tree Rivers Park District 1,304,690,419 1.6551%53,355,000 883,079
Hennepin County Regional Rail Authority 1,838,226,093 1.1747%31,535,000 370,442
City's Share of Total Overlapping Debt $42,729,541
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Relative Costs and Benefits of Alternative Uses of the Funds
There are no significant alternatives for funds designated for this project.
Operating Costs of the Proposed Improvements
The size of City Hall will remain the same. The City is replacing the
windows and changing out the electrical/lighting components for increased
energy efficiency throughout the building, which should lower this portion
of operational costs.
Options for Shared Facilities with Other Cities or Local Government
Sharing a City Hall with another community is not an option since residents
would have to drive outside of their community to complete any City
business or attend meetings.
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V. FINANCING THE CAPITAL IMPROVEMENT PLAN
The total principal amount of requested expenditures under this Capital
Improvement Plan is $6,000,000. This amount represents the maximum
principal amount of CIP Bonds that may be issued to finance capital
improvements to City Hall. Principal and interest on the CIP Bonds will be
paid through a tax levy over the term of the CIP Bonds, further described in
Appendix A.
At this time, the City anticipates issuing Bank Qualified (BQ) bonds in one
year for a 16-year term.
In the financing of the Capital Improvement Plan, two significant statutory
limitations apply.
1. Under Chapter 475, with few exceptions, municipalities cannot incur
debt in excess of 3% of the assessor’s estimated market value for the
municipality. In the City, the estimated market value is
$2,006,534,000. Therefore, the total amount of outstanding debt
cannot exceed $60,196,020. These values are for 2018/19 tax year.
As of December 18, 2018, the City has $17,350,000 subject to the
legal debt limit (this amount includes the 2012A, 2015A, 2014A
(SROP portion), 2014B (CIP portion), 2017A SROP Portion, 2018A
(SROP and Equipment Certificate portion), 2012A (Equipment
Certificate portion), 2016C (Equipment Certificate portion). As such,
issuance of the CIP Bonds will be within the overall statutory debt
limit for the City.
2. A separate limitation under the CIP Act is that, without referendum,
the total amount of principal and interest in any one year on all CIP
Bonds issued by the City debt cannot exceed 0.16% of the total
estimated market value in the municipality. In the City, that
maximum annual debt service amount is $3,210,454 based upon the
2018/19 tax year ($2,006,534,000 x .0016). The annual principal and
interest payments on the 2012A CIP Bonds, the CIP portion of the
2014B Bonds and the CIP portion of the 2019A Bonds proposed to be
issued under this CIP will average approximately $1,445,677. As
such, debt service on the CIP Bonds will be within the annual limits
under the CIP Act.
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Details regarding the proposed terms of the CIP Bonds under this CIP are
shown in Appendix A. A schedule of events for approval of the CIP and
issuance of the CIP Bonds is shown in Appendix B; and the form of the
public hearing notice and resolution approving the CIP are shown in
Appendix C.
Continuation of the Capital Improvement Plan
This Capital Improvement Plan should be reviewed annually by the City
Council using the process outlined in this Plan. It should review proposed
expenditures, make priority decisions, and seek funding for those
expenditures it deems necessary for the City. If deemed appropriate, the
Council should prepare an update to this Plan.
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APPENDIX A
PROPOSED 2019 CIP BOND ISSUE
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APPENDIX B
Schedule dated December 3, 2018
5-Year City Capital Improvement Plan Bond Issuance
City of Hopkins, Minnesota
The City Council must take the following actions before Bonds can be issued:
• City Council conducts a Public Hearing on issuance of Bonds and Capital Improvement Plan.
• City Council approves Bonds and Capital Improvement Plan by at least a 3/5ths vote of the
governing body membership.
The table below lists the steps in the issuing process:
November 29, 2018 Close date to get Notice of Public Hearing on issuance of Bonds and
on Capital Improvement Plan to official newspaper for publication.
December 13, 2018 Publish Notice of Public Hearing on issuance of Bonds and on Capital
Improvement Plan (publication no more than 28 days and no less than
14 days prior to hearing date). Additionally, notice may be posted on
the City’s official web site, if any.
January 2, 2019 At or shortly after 7:00 p.m. - City Council holds Public Hearing on
Bonds and on Capital Improvement Plan and adopts Resolution giving
preliminary approval for their issuance and approving Capital
Improvement Plan by at least a 3/5ths vote of the governing body
membership.
February 2, 2019 Reverse referendum period ends (within 30 days of the public
hearing).
February 19, 2019 City Council accepts offer for Bonds and adopts Resolution-
Approving sale of Bonds.
First week of March 2019 Tentative closing/receipt of funds.
Assessor's Estimated Market Value 2,006,534,000
Multiply by 3%0.03
Statutory Debt Limit 60,196,020
Less: Debt Paid Solely from Taxes (2,815,000)
Unused Debt Limit 57,381,020
Net Debt Limit
Assessor's Estimated Market Value 2,006,534,000
Multiply by .16%0.0016
Statutory Levy Limit 3,210,454
Less: Annual Levy under CIP (1,445,667)
Unused Levy Limit 1,764,787
Annual Levy Limit
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APPENDIX C
NOTICE OF PUBLIC HEARING
CITY OF HOPKINS, MINNESOTA
2019-2023 CAPITAL IMPROVEMENT PLAN
AND NOTICE OF INTENTION TO ISSUE
CAPITAL IMPROVEMENT PLAN BONDS
NOTICE IS HEREBY GIVEN, that the City Council of the City of Hopkins, Minnesota, will
meet on January 2, 2018, at approximately 7:00 p.m. at the City Hall, 1010 1st Street South, in
Hopkins, Minnesota, for the purpose of conducting a public hearing on (1) the intention to issue
general obligation capital improvement plan bonds (the “Bonds”) in an amount not to exceed
$6,000,000 000 to finance various capital improvements to the City Hall within the City; and (2) the
proposal to adopt a capital improvement plan for 2019 through 2023 pursuant to Minnesota Statutes,
Section 475.521.
All persons interested may appear and be heard at the time and place set forth above.
If a petition requesting a vote on the issuance of the Bonds is signed by voters equal to five
percent of the votes cast in the City in the last general election and is filed with the City within 30
days after the public hearing, the Bonds may only be issued upon obtaining the approval of the
majority of the voters voting on the question of issuing the Bonds.
A copy of the plan is available for inspection in the City Clerk’s Office at City Hall.
Question or comments may be directed to the City Finance Directors Office at 952- 548-6330.
All interested persons may appear and be heard at the public hearing either orally or in
writing, or may file written comments with the City Clerk before the hearing.
BY ORDER OF THE CITY COUNCIL OF
THE CITY OF HOPKINS, MINNESOTA
______________________________________
City Clerk
[Published December 13, 2018]