City Council Corner
What's next for city hall?
By City Manager John Park
Last month, the city made the announcement of our intent to build Cottonwood Heights’ first city hall. This facility will house all of the city’s departments, which include finance, public works, police, community and economic development and administration. Our new city hall will be at the northwest corner of 2300 East and Bengal Boulevard.
So now the real work begins. How should we decide what needs to be built into the building and grounds, how will we finance it, who designs it, and who builds it? And when do we get to move into our new digs?
To start the decision making process, we held an open house on March 19 and invited citizens to learn about the city hall, give their input about the building’s look and feel, and tell us what types of public amenities they would like to see in the new building. (Informational materials from that meeting and information on how to submit comments are available on the front page of the city website, www.ch.utah.gov.) Employees in the city’s various departments as well as members of our committees and councils also have the chance to weigh in on department needs and priorities.
Our philosophy related to this project is to receive as much input as possible to make sure we consider everything before deciding on the final building plan. We will continue to ask for input from our citizens throughout this process and we will also release updates during construction, so please let us know what is important to you.
An architect and general contractor will be hired to design the building and carry out construction. Although there are a few different ways to establish a design and move forward on the building, research and experience has shown that the best way to efficiently and responsibly build a building is to gather a team consisting of our builder, architect and engineers and get them involved as early as possible during the design phase. As of the date of publication of this newsletter, neither an architect nor builder has been selected.
Each of the properties we have under contract is scheduled to have final purchase occur before June 30 of this year. We anticipate that the buildings will be ready for demolition by the first of September. Once demolition is done we will ask all of you to join us in our groundbreaking celebration before we start construction at end of September or beginning of October.
Financing, of course, is an important part of this process. Interest rates are still near historic lows, and the city has no outstanding debt and is in an excellent financial position, which makes the timing perfect to finance a building. The type of bond the city will pursue is called a sales tax revenue bond, which is paid for out of the city’s general fund. These bonds differ from the general obligation bonds (or G.O. bonds) typically used by schools that are dependent on property tax. Because G.O. bonds impose a new property tax, they require a vote. Sales tax revenue bonds do not impose a new property tax and therefore are not subject to a vote.
The first major step in financing the building will occur on April 8. At that time the city council is scheduled to approve a “super parameters resolution.” This resolution accomplishes three things. First, it is a legal document that allows the city to capture any project costs they have incurred in the last 60 days and, if needed, receive reimbursement from the bond proceeds. The second part gives notice that the city is ready to borrow funds to build our building given that certain parameters are met. These parameters dictate the maximum amount the city will borrow, the maximum interest rate it will pay, the maximum length of time allowed to repay the bond and how we intend to pay back the bond. Finally, the resolution establishes a committee which has the right to negotiate and accept the final terms of the bond.
There are two things to remember about the super parameters resolution. First, and probably most importantly, this is only a vehicle to start the process of borrowing money and does not obligate Cottonwood Heights to borrow anything. The decision to actually move forward only happens right before we actually sell the municipal bonds.
The second thing to remember is the parameters resolution sets boundaries for the amount of money that we will borrow, the maximum interest rates and repayment times, but those boundaries set maximum limits. We may not need the full maximum limits as set by this resolution. For instance, the proposed resolution will set the maximum interest rate at five percent. However, we do not intend to pay anywhere near five percent; we anticipate paying closer to 3.75 percent.
After adoption of the parameter resolution, the council will issue a “notice of intent to issue bonds.” This a public notice that is required by state law and will set a date for a public hearing for input concerning issuance of a bond. That hearing is tentatively scheduled for May 6.
At the end of April or first of May, we will approach a couple of the rating agencies such as Standard and Poor’s to establish a credit rating, which will give potential bond purchasers an idea of our financial position. We feel we are in a great financial position and believe we will receive a high investment grade rating that will allow the city to access the capital market at the lowest possible borrowing cost.
Once the rating agencies establish our credit rating, the city will then be able to price the bond and then offer the bonds for sale. Prices on municipal bonds vary from day to day, making timing very important. One time restraint is that the city’s credit rating by the rating agency is only good for 60 days. If we do not sell the bonds by then we must go through the rating process again. It is not as onerous as getting rated the first time, but does require additional costs.
What all this means is that by June or July we will have the financing in place to begin preparation of the building site and construction of the new city hall. This is a complicated but much-needed project, and we hope you are as excited about it as we are.