FUNDING OPTIONS FOR FACILITIES (Police and Fire)

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Medford City Council Study Session

September 12, 2013

PROJECT HISTORY - Police Facility Established NEED

Currently occupying 15,000 sq feet of space. Built in 1967 (was supposed to be temporary location at
that time).

Space Needs Study by MacKenzie presented to City Council on March 14, 2013 Study Session. Current location does not meet seismic requirement for Essential Facility and Public Safety should not be housed in this City Hall building.
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PROJECT HISTORY - Police Facility Established NEED

Co-mingled public areas and multi-use facility creates substantial risk to the safety of all current City Hall users, including the public. Public and secure space is mixed, as is secure space with civilian employees, making it a huge safety risk in current location. Secured space is inadequate. Lack of operation space for report writing, interview rooms, locker rooms and storage, lack of secured police parking.
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POLICE NEED
Determined to be a facility of 42,423 ft with a parking structure of 223 stalls. City-owned property on 10th St at Ivy St. Cost of recommended facility is $21.6 Million.
(including parking garage and cost of debt)

POLICE NEED
Considerations already made:
Construction on City-owned property - no cost for land Surface parking lots and pedestrian improvements to be paid out of budgeted funds (-$700,000) Proposed facility allows for 20-25 year growth; after that substations/precincts

PROJECT HISTORY - Fire Facilities Established NEED

August 2012 Facilities Master Plan provided by MacKenzie and previously presented to City Council. Initial estimate for rehabilitation of Fire Stations 2 through 6 as well as training and logistics = $16.6 M.

PROJECT HISTORY - Fire Facilities Established NEED

Project Costs:
Fire Station #2 Fire Station #3 Fire Station #4 Fire Station #5 Fire Station #6 Training Logistics Cost of Issuing Debt Total
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$3.9 $4.4 $2.7 $2.0 $0.5 $2.4 $0.7 $0.2 $16.8

Million Million Million Million Million Million Million Million Million

PROJECT HISTORY - Fire Facilities Projects Removed/Reduced:

Fire Station #2 Fire Station #3 Fire Station #4 Fire Station #5 Fire Station #6 Training Logistics Cost of Issuing Debt Total
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$3.1 $4.4 $2.7 $2.0 $0.5 $2.4 $0.7 $0.2 $10.4

Million Million Million Million Million Million Million Million Million

$6.4 Million Reduction

FUNDING OPTIONS
Police $ 21.6 Million Fire $ 10.4 Million $ 32.0 Million Total bond needed What are the funding options available and what are the estimated costs? What are the revenue options to meet that cost?
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SOME CONSIDERATIONS:
First discuss the BOLI issue and the potential for cost savings.

Comparison was BOLI wage rate vs AGC Union rate. Non-Union rates are not included.
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CONSIDERATIONS(cont):
Not as much potential for savings as anticipated in a non-BOLI job. The estimate is in the 3% to 5% range. This type of construction is generally at union scale, so the savings are minimal. These types of facilities would be BOLI wage jobs under the definition of ORS 279C.840 in standard government financing (Bond Options #1 and #2). In order to avoid BOLI, the City would have to use other funding options (NNN/Lease, Debt/Equity) that are not recommended.
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FUNDING OPTIONS
We reviewed/examined other funding options:
Bond Option #1 (General Obligation Bond) Bond Option #2 (Full Faith and Credit Obligation Bond) Lease Triple Net Option Debt/Equity Option 63/20 Option

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FUNDING for PUBLIC SAFETY FACILITIES

FUNDING

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Canby Gresham Keizer Klamath Falls McMinnville Monmouth Roseburg Sandy Springfield Troutdale West Linn Woodburn

Urban Renewal Urban Renewal Urban Renewal Bond Measure Bond Measure Bond Measure Urban Renewal Urban Renewal Bond Measure Bond Measure Bond Measure Bond Measure

CONSTRUCTION PERIOD 08/2011 08/2012 03/2013 12/2013 03/2008 early 2009 05/2009 07/2010 03/2007 06/2008 Passed in 05/2013 04/2008 11/2009 08/2009 09/2011 02/2008 02/2009 10/2011 09/2012 started 09/2013 09/2005 10/2006

FUNDING OPTIONS
We and our consultants agree that a Full Faith and Credit Bond (Bond Option #2) is the recommended funding option: City of Medford has bonding capacity Does not require a referendum approval We have an identified revenue source to meet the interest/principal payment More timely to implement
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BOND OPTION #2 (example)

$32.0 million 30 years at 4.75% Full Faith and Credit Obligation Bond Option #2

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Bond Option #2
Project Costs for Both Police and Fire:
Police Facility
Building,Garage & Parking lot Land - City owned Parking lot - "pay as you go" Cost of Issuing Debt Amount needed 21,900,000 (700,000) 400,000 21,600,000

Fire Facilities
New Fire Station & All Renovations Land for the new fire station - City owned Some Renovations - "pay as you go" or eliminated Cost of Issuing Debt Amount needed 16,600,000 (6,400,000) 200,000 10,400,000

Total Amount to be Borrowed Annual Payment

30 year debt - interest rate of 4.75%
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$ 32,000,000 $ 2,000,000

FUNDING ALTERNATIVES WITH BOND OPTION #2

$32.0 Million Bond = Total annual payment of $2 Million
(based on 4.75% on 30 year bond)

Alternative 1 = Some combination of:

% of Public Safety Facility Surcharge $ % of City of Medford Tax increase $ % pay as you go budgeted funds for a portion
This would require a referendum by voters if tax rate increased
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FUNDING ALTERNATIVES WITH BOND OPTION #2

(cont)
Alternative 2 = $0.35 per $1000 increase in City of Medford tax rate.
$53 per year for an assessed $150,000* home generates $2 Million per year.
(deductible/tax advantage)

* Average assessed value for Medford residence * This would require referendum approval if tax rate increased
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FUNDING ALTERNATIVES WITH BOND OPTION #2

(cont)
Alternative 3 = Public Safety Facility Surcharge
(recommended option) $2.00 per month per residential/business unit will generate an estimated $0.9M per year.

When the Street Fee surcharge is removed, increase the Public Safety Facility Surcharge to $4.82. This will generate an estimated $2.5M per year.
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SURCHARGE STRUCTURE OPTIONS:

In approximately 60 months, the Transportation Projects surcharge will end. For SFR (single family residence), that will result in $2.82 decrease in the Street Fee. Public Safety Facility Fee Surcharge could begin at $2.00 and increase to $4.82 at the time the Street Fee portion expires in approximately 2018.

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Current & Proposed Monthly Utility Charges - SFR

$60.00

$50.00

$2.95 $2.60 $12.15

$2.00 $2.95 $2.60 $12.15

$2.00 $2.95 $2.60 $12.15

$2.00 $2.95 $2.60 $12.15

$2.00 $2.95 $2.60 $12.15

$4.82 $2.95 $2.60 $12.15

Pub Safety Surcharge Parks Public Safety Water

$40.00

$30.00

$7.71
$20.00

$7.71 $8.45

$7.71 $8.45

$7.71 $8.45

$7.71 $7.71
Storm

$8.45

$8.45

$5.63

Street

$10.00

$15.85
$0.00 Current Fees

$15.85

$15.85

$15.85

$15.85

$15.85

Sewer

Initial Fees

2015

2016

2017

2018

Total: $49.71
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$51.71

$51.71

$51.71

$51.71

$51.71

UTILITY FEE RATES COMPARISON

$51.71

Medford has a very low utility fee rate which includes the street fees. With the $2.00 per month increase, we are still at the same ranking for utility fees. 23

Current & Possible Monthly Utility Charges - SFR

$60.00

$50.00

2.95 2.60 12.15

2.00 3.63 2.60 12.15

2.00 3.63 2.60 12.15

2.00 3.63 2.60 12.15

2.00 3.63 2.60 12.15

2.00 3.63 2.60 12.15

4.82 3.63 2.60 12.15

Pub Safety Surcharge Parks Public Safety Water

$40.00

$30.00

7.71
$20.00

7.71 8.45

7.71 8.45

7.71 8.45

7.71 8.45

7.71 7.71
Storm

8.45

8.45

5.63

Street

$10.00

15.85
$0.00

15.85

15.85

15.85

15.85

15.85

15.85

Sewer

Current Fees

2013

2014

2015

2016

2017

2018

Total: $49.71

$52.39

$52.39

$52.39

$52.39

$52.39

$52.39

This includes a proposed Public Safety Facilities Surcharge ($2.00) and possible Park fee increase ($0.68) 24

POSSIBLE STREET, STORM AND SEWER INCREASES :

Storm Street Sewer

$1.23 in 2014 $0.80 in 2014 $1.60 in 2014

$0.63 in 2015 $0.46 in 2015 $0.81 in 2015

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Current & Additional Possible Monthly Utility Charges - SFR

$60.00

$50.00

2.95 2.60 12.15

2.00 3.63 2.60 12.15

2.00 3.63 2.60 12.15

2.00 3.63 2.60 12.15

2.00 3.63 2.60 12.15

2.00 3.63 2.60 12.15

4.82 3.63 2.60 12.15

Pub Safety Surcharge Parks Public Safety Water

$40.00

$30.00

8.94 7.71 7.71 8.45 9.25

9.57

9.57

9.57 9.57

Storm

9.71

9.71

9.71

$20.00

8.45

6.89

Street

$10.00

15.85
$0.00

15.85

17.45

18.26

18.26

18.26

18.26

Sewer

Current Fees

2013

2014

2015

2016

2017

2018

Total: $49.71

$52.39
(included in graph)

$56.02

$57.92

$57.92

$57.92

$57.92

Possible increases:
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Parks Storm Street Sewer

$0.68 in 2013 $1.23 in 2014 and $0.63 in 2015 $0.80 in 2014 and $0.46 in 2015 $1.60 in 2014 and $0.81 in 2015

PUBLIC SAFETY FACILITIES

COMPARABLE CITIES BOND DEBT
Snapshot June 30, 2012

Bend
General Obligation Bonds $0

Gresham
$0

Springfield
$25.8M

Medford
$ 3.1M

Full Faith & Credit Bonds (minus URA)

$64.4M

$74.1M ($23.6M)

$0

$49.7M ($20.9M)

Renewal Bonds (minus URA)

$15.0M

$8.3M

$30.8M

$25.9M ($ 5.0M)

Total Bond Debt (minus URA)

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$79.4M

$58.8M

$56.6M

$52.8M

RECOMMENDATIONS:
Move forward with the proposed Public Safety Facility Surcharge plan. Come back to Council in the next 60 days with a finalized plan to implement the code change. Council direction.

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Thank you

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