Sunset Hills board eyes financing options for Prop P projects


Two financing options for Proposition P projects were scheduled to be considered this week by the Sunset Hills Board of Aldermen.

Aldermen planned to consider two resolutions to fund the Proposition P projects, which include a new aquatic center, stormwater improvements and a new community center, Tuesday and Wednesday — after the Call went to press.

One resolution calls for issuing bond-like certificates not to exceed $14.5 million in principal and the second resolution calls for issuing bond-like certificates not to exceed $12 million in principal.

Aldermen planned to discuss the resolutions Tuesday, but not take action until Wednesday because Ward 3 Alderman Stephen Webb and Ward 4 Alderman Frank Gregory would be unable to attend the first meeting. Mayor Mike Svoboda said he believed all board members needed to be present for the vote.

In April 2007, city voters approved Prop P, a 20-year, half-cent sales tax to fund parks and stormwater improvements.

In recent months, the scope of the Prop P projects and their financing have been the focus of extensive discussions by aldermen. City officials plan to issue certificates of participation, or COPs, to fund the projects, which currently carry an estimated price tag of $11.4 million.

Jim Lahay of Stifel Nicolaus recently updated aldermen about the certificates, noting the estimated interest rates will be near 2.5 percent for the first two years and increase up to 5 percent by the time the AA-rated COPs are retired in 2028. This year, Prop P is projected to generate $1,232,200 in revenue — based on 1 percent growth for this fiscal year. Consequently, Sunset Hills will pay roughly $1 million a year for the next 20 years to retire the COPs.

Some aldermen recently have voiced concerns about the city’s ability to retire the certificates. Ward 1 Alderman Bill Nolan gathered board members to discuss alternative funding proposals at a special meeting June 23.

Six aldermen attended while Svoboda, Ward 2 Alderman Tom Hrastich and Ward 3 Alderman Jan Hoffmann were absent.

“We spent two hours talking about it, and when we got to the end of the meeting the consensus seemed to be that we were nowhere,” Nolan said. “There were three people who didn’t want to do the want to do the 14 (million dollars in COPs) and three people who would if that was the only other option … It was a very good meeting. We weren’t voting. We were just finding out where people stood and were sharing information.”

That’s why the second resolution for issuing COPs not to exceed $12 million in principal was placed on this week’s agenda. But Svoboda is unsure if this amount would fund all of the projects.

Nolan is concerned about the total cost of the projects and whether the Prop P revenue will come in as projected.

“I think it’s foolhardy to optimistically feel that our sales-tax revenue is never going to get any lower,” he said. “We don’t have any plans for any further development. We don’t have any sales-producing retail development coming in, and you don’t produce any revenue with the money being spent on parks and the recreation center.”

Nolan, who was elected in April, admits his perspective is different than someone who has been planning this project from the start. However, he believes there must be a better way to fund the projects.

“If you allow for the financial consequences of what’s being done, we’re talking about spending $21 million and committing 19 years of boards of aldermen and mayors to one obligation,” he said.

Nolan supports constructing a functional pool for the community, but considers the extra amenities unnecessary expenses.

He also believes city reserves should be used to fund some of the stormwater projects and advocates delaying the construction of the community center.

“I think we should use the reserves to do some stormwater, and pay back our reserves,” he said. “I think we ought to wait some time before we do the recreation center. Don’t borrow as much as you can, and then spend it at once.”

But Svoboda believes the city will not have a problem retiring the certificates.

“We’ve been over this so many times,” he said. “The Parks Board, Special Projects Committee and the Board of Aldermen have all held meetings over what should be in this. It’s like we took a step back in time and started all over again.”

Aldermen this spring adopted a resolution detailing a list of priorities for the revenue generated by Prop P.

The new pool and its multiple amenities were granted top priority. Watson Trail Park Pool cannot open for the 2010 swim year without significant renovations, according to Parks and Recreation Director Gerald Brown. He believes the pool was designed similar to residential pools and lacks certain features of typical commercial style pools. Additionally, new safety codes have eliminated the pool’s diving well, and the 275 members of the swim and dive team have outgrown their six lane pool.

“I think it’s just a small pool for our city,” he said. “Currently, our pool just doesn’t have any bells or whistles. There’s no lazy river. There’s no diving board, and we don’t have any big slides …”

After the pool, the board deemed the list of stormwater projects as the next priority.

Any remaining funds would be used to construct the new community center.

“It looks like the community center is going to take the hit, and the cut backs of the money,” Svoboda said. “Hopefully, we’ve got enough to do the parks offices and meeting rooms. Which is like basic, basic community center, and then we’ll start expanding from there.”

Both Svoboda and Brown are unsure if enough funding will be available for the gymnasium and fitness center originally planned as part of the community center.

These amenities ranked at the bottom of the board’s priority list.

City Engineer/Director of Public Works, Anne Lamitola recently applied for a federal grant to help fund specific stormwater projects. This grant approved by the East-West Gateway Council of Governments will incorporate the replacement of two culverts along Tributary B. The federal government will provide 80 percent of the funding toward this project.

“The project that Anne Lamitola got our federal grant for, that helps a lot,” Svoboda said. “That just makes our community center get a little bigger.”

If funding is not available for the gymnasium and fitness center, both Svoboda and Brown hope voters will consider extending the sunset on the Prop P.

“I’d like to see the end date go from 20 years out to 30 years to get some money to complete anything that is going to be half done,” Svoboda said. “If we’re lucky, the economy is going to come back, and we’re going to have more money than we can imagine.”