City to issue two bonds for parking platform project
Published August 13, 2014
ROCHESTER — City officials are moving closer toward constructing two new parking platforms in downtown Rochester.
By a unanimous vote July 28, the Rochester City Council approved a resolution authorizing a notice of intent to issue bonds to fund two above-ground parking platforms — one at University and Fourth, on the west side of Main, behind Mr. B’s, and other at University and Fourth, on the east side of Main, behind the Main Street Plaza. The platform behind Mr. B’s would be three levels, while the one behind the Main Street Plaza would be two.
Tom Traciak, of the accounting firm H.J. Umbaugh & Associates, said the resolution enables the city to issue the bonds 45 days after the notification is published, with the first bond sale planned for this fall and the second bond sale planned for early next year. This is a first step in a multi-step process, he added, noting that it does not obligate the city authorize the bonds in any way.
According to the notice language, the city plans to borrow an amount not to exceed $12 million to pay all, or part, of the cost of constructing two new parking platforms in the city, together with a necessary site improvements, as well as acquiring and installing various parking system improvements with the city.
“We have determined that it would be in the city’s best interest to issue two series of bonds — one for the east parking platform and one for the west parking platform. The issuance cost, of course, is more expensive for the issuance of two bonds, but we’ve calculated that the interest saved in the months that we will not be using the money for one parking platform — because they will be constructed in succession — would be more than issuance cost,” City Manager Jaymes Vettraino said.
The bonds will have a maximum duration of 20 years. The principal and interest of the bonds will be payed back with funds from the general fund, while debt service on the bonds will be paid for using funds from the parking system, special assessments, funds made available to the Rochester Downtown Development Authority, and the city’s general funds.
Mayor Jeffrey Cuthbertson said City Council still has final approval before issuing the bonds — the notice is just a legal requirement to alert the public so that anyone objecting can attempt to put the matter to a vote of residents. They would have 45 days to collect signatures from 10 percent of registered voters to make that happen.
“Bonds, particularly in this amount, are a significant question and there is a right to referendum that exists, so taking action on this starts that clock ticking, which affects the entire rest of the timeline of the actions that we may or may not take as a council,” he said.
Financially, the city is in a good position to issue new bonds, according to Traciak. He said the city has a bond rating of AA-plus with Standard and Poors, which he called “excellent.”
“The highest rating for bond insurers out there is a AA, so you’re rated higher than the bond insurers. You’re in an excellent position to issue debt,” Traciak told the council during the meeting. “Given your debt profile, you have a minimal amount of debt outstanding, you have well-managed financials and good cash balances, so there is no reason to doubt that you’ll maintain that rating.”
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