BOND:  "A SEXY WORD FOR DEBT"
DIFFERENT WAYS THE CITY CANDO IT
Councilmembers were part of a review and learning workshop on Thursday, January 23rd, conducted by the city's bond advisor Paul Donna of Northland Securities and also Jylan Johnson, the city's Finance Director.
Mr. Donna spoke mainly about the bond market and "things you should be aware of as decision makers," including the various statutes that allow cities to issue debt, and "the hoops you have to jump through."
"A bond is a sexy word for debt," he said, and there are four main kinds of debt.
*A General Obligation Bond means the city will levy without limit to pay the debt.  It uses property taxes.
*A General Obligation Revenue Bond pledges revenue from a definite source, like water and sewer funds, and will levy taxes only if the definite source becomes unavailable.
*A Revenue Bond is pledged solely by a particular source.  Along these lines Mr. Donna stated that the Victoria Field House was financed by a Gross Revenue Bond.
*Lease Revenue Bonds are not long term debt and can be cancelled at any time.  The city makes annual appropri-ations to pay off this debt to finance park-land, for example.
"There are all types of ways to get around referendum requirements and levy limits," said Mr. Donna.  "The Statutory Debt Limit is 2% of the Estimated Market Value [EMV] of the city."
He said the EMV of the City of Vic-toria for 2001-2002 was $387,100,900 -- which meant a Statutory Debt Limit of approximately $7.7 million.  The city's actual debt was approximately $2.1 million, he said.
"Typically, bond issues get ratings," stated Mr. Donna, who pointed out these ratings range from Aaa to Baa.  Only seven cities in the state are rated Aaa.  "Victoria will probably never have an Aaa rating because of demographics and the city is mainly residential."
Victoria's rating is A3, one step be-low A2 and one step above B.  In deter-mining a bond rating, said Mr. Donna, "they look at debt, debt per capita, eco-nomic future, flexibility to meet down-turns, general fund balance, and stability of council and staff.
He said bonds can be sold competi-tively, negotiated, or privately placed. 
Another word used by Mr. Donna was "arbitrage."  It means:  the purchase of securities on one market for immediate resale on another market in order to profit from a price discrepancy.

Jylan Johnson spoke of three types of Fund Accounting.
*Government Funds include, for ex-ample, General Revenue Funds, Debt Service Funds, Special Revenue Funds, Capital Project Funds, and Special Assessment Funds.
*Proprietary Funds include, for ex-ample, Enterprise Funds such as for Sewer and Water, and Internal Service Funds, which Victoria doesn't have today.
*Fiduciary Funds include donated funds from outside for specific purposes, for example, developer escrow accounts and pension funds.
"It works very well, knowing there are specific purposes and public purposes for public money," she said.  As of December 31st, 2002, the city-wide cash and investment balance was $8,793,931.  This amount "in the bank" fluctuates widely, depending on timing of city expenditures and revenues.

ZUMBRA RIDGE WANTS BETTER STREETS
AND HOPES TO DO SO RATHER PRIVATELY
Carol Mortenson, resident at Zumbra Ridge presented a petition on January 9th, asking for an ordinance to assure collection of project costs as residents in the neighborhood pursue private upgrade of streets. 
City Attorney Laurie Miller ex-plained that purpose of the new ordinance is to help cities and residents work together.  "The [Zumbra Ridge] residents don't want to go through a special assessment cost.  This ordinance is so everyone pays and not just those who step forward.  It would define a housing improvement area and help set a fee and a number of years for payment."
She said a public hearing will be needed, and that the neighborhood im-provement can actually be funded by city bonds.  This new statute "came on the books" in 1996, she stated, but is already going "off the books" in 2005. 
"I don't see any significant risks," with the request, she stated.  "It seems a good way to improve their streets."
Council unanimously moved to draft such an ordinance.  One of the next steps will be to order a public hearing.

INCREDIBLE BILL FROM CARVER COUNTY
A HUGE SURPRISE OF $229, 314
"I'm incredulous that we got a bill two years later," said Mayor Jerry Bohn about a bill from Carver County for work on the reconstruction of County Road #11.  The bill was for $229,314.  A motion on January 9th to pay it passed unanimously.
"I'm surprised in receiving it," said City Engineer Jack Griffin.  He said he searched the files and "the amount they're charging is the right number."  It's the city's share of the reconstruction project, which included watermain improvements.
Councilmember Mary Thun stated that she didn't see this number in the city budget for 2003 and asked where the dollars will come from?  Finance Director Jylan Johnson said it'll come from the street reconstruction fund.
Replied Councilmember Thun, "As we look toward the future, I'd like to make sure the budget we're looking at is for the budget items we approve and not for something in other areas."
"This is a huge surprise," said Mayor Bohn.

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