Bonds fast track roads, slow new city hall
June 10, 2008 · Updated 6:28 PM
POULSBO Bonds sold by City of Poulsbo last week represent one step forward in one arena, but yet a step at least to the side in another.
At its March 12 meeting, the Poulsbo City Council approved the sale of a little more than $2.5 million in general obligation bonds. The bonds will be used to fund three transportation projects within the city and also to repay the bond anticipation note (BAN) on the Morris Property near Poulsbo Village that was originally purchased to house a municipal campus.
One of the transportation projects, the Finn Hill widening, is planned to take place this summer. The 10th Avenue and Caldart Avenue improvements are slated for 2004.
So the money is ready and were ready, commented Councilman Dale Rudolph on the project funding.
But the story is not quite the same with the Morris property.
The recently-sold bonds are being used to repay a $600,000 bond anticipation note used to purchase the property in 2000. The 2.75-acre parcel next to the already city-owned Public Works facility was planned to be developed in four phases and to eventually include city hall, permitting, police, courts and public works in one area.
In February 2002, the city council contracted with Seattle architectural firm Merritt & Pardini for $76,400 to conduct a project study. The resulting plan put the cost of Phase 1 (new city hall) at about $6 million and said that under an aggressive approach, city staff could be moving into the new facility by the middle of 2003.
Under recent economic constraints, however, that has not happened. Earlier this year the council decided that it would be best to hold off until the financial future was easier to read.
At the time the land was purchased, it looked like we could conceivably do everything so to speak, explained Councilman Ed Stern. However, to purchase the land and not go forward with the construction is holding up a fair amount of the citys bonding capabilities.
City Engineer John Stephenson said the city originally thought that the purchase price of the Morris property could be covered under a construction bond when the new city hall was built. However, because that construction has not gone through as quickly as originally believed, city staff recommended rolling the project into the bond sale with the transportation projects.
Id say its more of a go slow approach, not that theyve decided not to do it, Stephenson said.
Jim Nelson, senior municipal underwriter for Martin Nelson & Co., served as bonding council for the $2.5 million bond. He said that the good news is that by combining the two uses into one bond, Poulsbo saved money. He also said that the citys excellent accounting process netted it an A rating by Standard and Poors, which saved the city even more money.
For a city of this size its a great accomplishment to receive an A rating, typically we see cities of this population size getting A- ratings, Nelson told the council March 12.
We need to maintain good reserves, thats how we got our A rating, added Stern, noting that he feels the decision to hold off on the municipal campus was a financially-prudent one.
The portion of the $2.5 million bond that will pay off the $600,000 Morris property BAN also contains a clause that allows it to be called, or paid off, in 2008. Council members opted for this ability because of recent discussions that the council may also choose to abandon the municipal campus plans altogether and potentially sell the property instead. Stern said the council is attempting to look for highest and best use of its facilities and while the current city hall is old and limited, it may not be financially feasible to build on the Morris property.
A municipal campus as it is does not add value. Its not a new road and its not a new sewer system so we need to make sure that when we spend money we consider that. Our priority is going to be direct benefits and if push comes to shove the indirect benefits are going to go on the back burner, Stern commented. Were willing to carry that and wait five years but at the end of five years we have the mechanism to jettison that cost if we feel we need to. In five years either the crystal ball will be clear or well move on.