HomeMy WebLinkAboutResolution No. 4386, placement of Park and Recreation Bond on November 2012 Election Ballot.pdfCommission Memorandum
REPORT TO: Honorable Mayor and City Commission FROM: Chuck Winn, Assistant City Manager
Greg Sullivan, City Attorney
Chris Mehl, City Commissioner
SUBJECT: Resolution 4386 authorizing the placement of a Park and Recreation Bond on the November 2012 Election Ballot.
MEETING DATE: July 16, 2012
AGENDA ITEM TYPE: Action
RECOMMENDATION: Adopt Resolution No. 4386 placing a referendum on the November
ballot authorizing the City to sell bonds to acquire money for the purchase and improvement of
parks, trails, recreation fields and preserving water quality along creek and stream corridors. RECOMMENDED MOTION: I move to approve Resolution 4386 placing on the November
6, 2012 election as a special election of the City the question of selling $XX,000,000 in general
obligation bonds for purposes identified in the resolution.
BACKGROUND: At the June 18, 2012 City Commission meeting, the Commission directed staff to prepare a motion to be considered in July that would place a referendum on the
November ballot authorizing the City to sell bonds to fund the purchase and improvement of
parks, trails, recreation fields and preserving water quality along creek and stream corridors.
Staff has prepared Resolution 4386 that includes ballot language authorizing the sale of bonds
under The Montana Open-Space Land and Voluntary Conservation Easement Act (MCA Title
76, Chapter 6). This act provides specific authority to local governments to issue general
obligation bonds for the purposes of the Open Space Act:
The Open Space Act defines open space land as any land which is provided or preserved for:
• Park or recreational purposes;
• Conservation of land or other natural resources;
• Historic or scenic purposes;
• Assisting in the shaping of the character, direction and timing of community development
UNRESOLVED ISSUES: There are three primary issues for the Commission to decide; the
amount of the bond, whether and how bond money could be used on currently owned land, and
maintenance of any new trails, parks, and/or recreational fields purchased and developed with
the bond money.
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Amount. Bond amounts of both $10 million and $15 million have been previously discussed by
the Commission at their June 18, 2012 meeting. The Commission should decide on the amount
to go before the voters in the November election.
Use of Funds on Currently Owned Land. The Commission should decide on whether and
how bond money could be used on currently owned lands. The Resolution is written to provide
the Commission with maximum flexibility in how bond funds could be used in this manner. The
intent of the resolution is that any expenditure of bond money on currently owned land go through the same thorough review process as other lands. See 1.02. Commission Findings,
recital l, in the attached resolution.
Maintenance. Should the bond pass, it represents an historic opportunity to purchase land for
relatively low cost and at favorable financing—and waiting could make future purchases significantly more costly or even cost prohibitive. At the same time, the City should start
planning to maintain any new parks and trails and make the commitment to do so. Adequate
maintenance will be an integral component of the long-term success of Bozeman’s recreation
and parks efforts. This section of the memo discusses a number of issues concerning future
maintenance and outlines several possible steps to address this important subject accurately, adequately, and fairly.
When considering future parks and recreation maintenance needs, several questions must be
addressed regarding the timing, amount, and process of land acquisitions or upgrades from a
successful parks and trails bond. Simply put, what type of land (trail or recreation field), how much (three or eight acres), how quickly it is acquired (first year or fourth year), and the
availability of public-private partnerships to help maintain the land must be weighed. At this
time, the answers to these questions that impact maintenance costs—especially for the first
several years following the bond’s passage—cannot be accurately predicted, but will be know
with more certainty within several years.
In addition to better information, when considering future maintenance issues, the City’s new
Parks, Recreation, and Cemetery Director, who joins the City staff at the end of July, will play a
crucial role in providing advice and expertise to help guide the City Commission and the public
when making decisions concerning this issue.
If the bond passes, the City should develop a short-term approach to maintenance costs while
collecting the information, input, and support necessary to provide for a long-term solution
within the next three to five years. Such an approach will address any immediate needs for
appropriate maintenance while not over or under-charging taxpayers; and while moving toward an accurate and fair system for addressing sustained maintenance needs.
For the next several years, the City can use its annual budget process to address maintenance
issues while developing a long-term plan. This would continue the current practice of allocating
funds for maintenance annually, and these funds could expand incrementally as trails, parks or other lands are brought into the City system. Costs can and should be comparatively small
during the first several years as land is acquired or upgraded. The costs of maintenance are well-
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known by staff (see example details below), and could take into account differing costs for
various parks types, any maintenance partnerships, and other factors. Utilizing the annual
budget, at the start of the bond process, will help make sure that the maintenance budget is
targeted and well-spent, builds on existing staff, and will continue or expand work with volunteers to keep costs down.
Existing partnerships, such as that with the Gallatin Valley Land Trust, Rotary Club, Optimists,
and other civic groups, already provide volunteer support to the City’s parks and trails. A
number of Bozeman-based organizations are interested in expanding potential partnerships to save and stretch taxpayer dollars. For example, several outdoor recreation groups (soccer, rugby,
lacrosse, etc) are exploring the idea of signing an MOU with the City to provide some or all
maintenance for new or upgraded recreation fields.
During the development of a long-term maintenance approach, bond funds also may be used for some of these purposes if needed. Preferably, these funds should be utilized for capital
expenditures and capital-related maintenance such as repair and replacement. Under the
Montana statute that the City will utilize for the bond (The Montana Open-Space Land and
Voluntary Conservation Easement Act (Title 76, Chpt. 6, MCA; the “Open Space Act”), Section
76-6-109(e) provides that a city may, in connection with real property acquired or designated for the purposes of the Act, provide or arrange for construction, maintenance, operation, or repair by
any person or agency, public or private, of services, privileges, works, streets, roads, public
utilities, or other facilities or structures that may be necessary to the provision, preservation,
maintenance, and management of the property as open-space land. As noted in the June policy
memo, the City of Helena utilized similar bond funds for maintenance of land acquired “by the expenditure of the bond proceeds.”
For the longer-term, the City most likely will consider one of two options pending further
discussion from City staff and the public: (a) asking citizens to vote on whether to increase the
allowable mill levy, with those funds to be used for parks maintenance; or (b) the creation of a parks district (a “parks utility”) similar to those that already exists in a number of Montana cities
(which can be created by public vote or city commission action) that would charge a fee to city
residents for parks-related costs, much like Bozeman’s water, street, or sewer funds. Both of
these processes are well-suited to provide for the long-term maintenance of the City’s parks,
trails, and open space. In addition, both are well-known in Montana, and the new Recreation and Parks Director, other staff, and the public can participate in the discussion of which option makes
the most sense for Bozeman’s programs.
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Maintenance Costs Examples:
Typical
Parkland Athletic Fields
Direct
Cost/Acre
Annual
Frequency
total
cost/acre/year Annual Frequency
total
cost/acre/year
Mowing $40 20 $800 40 $1,600
Aeration $52 0
- 2 $104
Fertilization $121 1.5 $182 3.5 $424
Herbicide $64 0.5 $32 2 $128
Overseeding $460 0
- 1 $460
Total
cost/acre/year $1,014 $2,716
Staff
hours/Park
#
Occurrences
Staff Hourly
Rate Total Cost/park
Garbage/Restroom
Mgmt 2.0 112 15 $3360
Irrigation
Maintenance 60.0 1 15 $900
This table is meant as an overall summary to compare costs. Garbage/restroom management is daily for 16
weeks in the summer. Staff hours vary from 0.5 - 4 hours/park. Irrigation maintenance varies for
individual parks.
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FISCAL EFFECTS: Assuming a 2.82% municipal bond scale (today's rate), the cost to a typical household would be
$29.67 per year for a $10 Million bond, and $44.47 per year for a $15 Million bond. These
amounts would vary based on the amount of bonds sold and the interest rate at the time of the sale.
ALTERNATIVES: As suggested by the City Commission.
Attachments: Resolution 4386
June 18, 2012 Commission Memo
Report compiled on: July 8, 2012
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CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE
I, the undersigned, being the duly qualified and appointed City Clerk of the City of Bozeman,
Montana (the “City”), hereby certify that the attached resolution is a true copy of a Resolution entitled: “A RESOLUTION OF THE CITY COMMISSION SUBMITTING TO THE QUALIFIED ELECTORS OF THE CITY OF BOZEMAN, MONTANA, THE QUESTION OF ISSUING
GENERAL OBLIGATION BONDS IN THE AMOUNT OF UP TO
____________________________ AND NO/100 DOLLARS ($_____________) FOR THE PURPOSE OF ON OPEN SPACE LANDS DESIGNING, CONSTRUCTING OR EQUIPPING TRAILS, PARKS AND NATURAL AREAS OR MULTI-USE RECREATIONAL FIELDS AND
FACILITIES, OR FOR USE IN THE PRESERVATION OR ENHANCEMENT OF WATER
QUALITY, AND PAYING THE COSTS OF ACQUIRING RIGHTS TO OR INTERESTS IN OR IMPROVING OPEN-SPACE LANDS IN OR NEAR THE CITY (SUCH AS LANDS FOR TRAILS IN AND AROUND THE BRIDGER MOUNTAIN FOOTHILLS), TO INCLUDE NECESSARY
OR APPROPRIATE INFRASTRUCTURE FOR THE USE, ENJOYMENT, OR FUNCTIONING
OF SUCH LANDS OR FACILITIES AND THE OPERATION, MAINTENANCE, REPAIR,
MANAGEMENT, OR PLANNING OF SUCH LANDS OR FACILITIES; AND PAYING COSTS ASSOCIATED WITH THE SALE AND ISSUANCE OF SUCH BONDS” (the “Resolution”), on file in the original records of the City in my legal custody; that the Resolution was duly adopted by
the City Commission at a regular meeting on July 16, 2012, and that the meeting was duly held by
the City Commission and was attended throughout by a quorum, pursuant to call and notice of such
meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed.
I further certify that, upon vote being taken on the Resolution at said meeting, the following
Commission Members voted in favor thereof:
______________________________________________________________; those Commissioners
who voted against the same: _____________________________.
WITNESS my hand and seal officially this __ day of July, 2012.
(SEAL)
Stacy Ulmen, CMC
Bozeman City Clerk
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RESOLUTION NO. 4386
A RESOLUTION OF THE CITY COMMISSION SUBMITTING TO THE QUALIFIED ELECTORS OF THE CITY OF BOZEMAN, MONTANA, THE QUESTION OF ISSUING GENERAL OBLIGATION BONDS IN THE AMOUNT OF UP TO ____________________________ AND NO/100 DOLLARS ($_____________)
FOR THE PURPOSE OF ON OPEN SPACE LANDS DESIGNING,
CONSTRUCTING OR EQUIPPING TRAILS, PARKS AND NATURAL AREAS OR MULTI-USE RECREATIONAL FIELDS AND FACILITIES, OR FOR USE IN THE PRESERVATION OR ENHANCEMENT OF WATER QUALITY, AND PAYING THE COSTS OF ACQUIRING RIGHTS TO OR INTERESTS IN OR IMPROVING
OPEN-SPACE LANDS IN OR NEAR THE CITY (SUCH AS LANDS FOR TRAILS IN AND AROUND THE BRIDGER MOUNTAIN FOOTHILLS), TO INCLUDE NECESSARY OR APPROPRIATE INFRASTRUCTURE FOR THE USE, ENJOYMENT, OR FUNCTIONING OF SUCH LANDS OR FACILITIES AND THE
OPERATION, MAINTENANCE, REPAIR, MANAGEMENT, OR PLANNING OF
SUCH LANDS OR FACILITIES; AND PAYING COSTS ASSOCIATED WITH THE SALE AND ISSUANCE OF SUCH BONDS.
BE IT RESOLVED By the City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”) as follows:
Section 1. Recitals
1.01.
.
Authorization
a) A city as a public body is authorized pursuant to Section 76-6-109, MCA, to sell and issue general obligation bonds in the manner and within the limitations prescribed by applicable laws of
Montana for the purpose of acquiring and improving open-space land and other property consistent
with the provisions of Title 76, Chapter 6, Part 1, MCA (the “Act”). Section 76-6-104 of the Act
defines open-space land as any land that is provided or preserved for: park and recreational purposes; conservation of land or other natural resources; historic or scenic purposes; or assisting in the shaping of the character, direction, and timing of community development. Moreover, Section 76-6-109(e) of
the Act provides that a city may, in connection with real property acquired or designated for the
purposes of the Act, provide or arrange for construction, maintenance, operation, or repair by any
person or agency, public or private, of services, privileges, works, streets, roads, public utilities, or other facilities or structures that may be necessary to the provision, preservation, maintenance, and
management of the property as open-space land.
.
b) A city is authorized pursuant to Section 7-7-4221, Montana Code Annotated, to issue
general obligation bonds pledging the general credit of the city for any purpose authorized by law, upon approval of the electorate of the city, provided that such indebtedness will not cause the total
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indebtedness of the city to exceed 2.5% of the total assessed value of taxable property of the city, determined as provided in Section 15-8-111, MCA, ascertained by the last assessment for State and
county taxes. A city is authorized pursuant to Section 7-7-4223, MCA, to call a bond election by
adopting a resolution to that effect.
1.02. Commission Findings
a) The City’s 2007 Parks, Recreation, Open Space, & Trails (PROST) Plan, was unanimously adopted by the Commission and created with considerable public input. PROST identifies
parks, trails, and open spaces as the top recreation priority for City residents, and called for
the City to consider a bond for the purchase of trails and parkland.
. In adopting this Resolution, the Commission finds that:
b) The PROST plan, and City residents and staff also have identified a number of places
needing improved trails or connections, parks, recreation fields, and water quality protection.
c) The Commission at the beginning of 2012 made a bond for parks, trails, and recreation one of its top priorities.
d) The City does not have a dedicated fund for acquisition and improvements of public parks,
trails, and recreation fields.
e) Investments in the City’s parks, trails, recreation fields, and in preserving water quality along
creek and stream corridors will enhance the City’s public health, create safe, accessible
opportunities for outdoor recreation and transportation, help attract and retain businesses,
improve the sense of community by creating outdoor gathering spaces, and increase property values.
f) The City is hampered in its ability to host large outdoor sports tournaments due to the lack of
recreation fields and adequate facilities and the Bozeman Tourism Business Improvement District identified “limited sport/event fields and facilities” as one of the missed opportunities in the City.
g) The City’s Economic Development Plan repeatedly notes the importance of maintaining and
building upon the City’s high quality of life as both an economic attractant and as a way to help existing businesses grow and prosper.
h) During the City’s Economic Summit held in March, 2012, local business leaders highlighted
“quality of life” – which includes recreational opportunities, cultural and natural amenities – as well as education and a diversified economy as one of the best economic attributes of the region.
i) Business and academic literature increasingly cite the importance of quality of life for
attracting businesses in fields such as computers, entertainment, optics, and
Biotechnology – sectors the City has identified as candidates for future economic growth. j) Numerous studies have shown that parks and open space increase the value of neighboring
residential property.
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k) Now is an advantageous time to pursue a parks and trails bond because of relatively low land prices in combination with low borrowing costs; both factors which mean that taxpayer bond
dollars will provide a higher return on investment.
l) Should the electors approve the sale of bonds, the Commission shall, by resolution, establish guidelines for the evaluation of projects for which funds are proposed to be expended and may designate an advisory board or committee to assist in the establishment of such
guidelines and to review and make recommendations to the Commission on proposals for use
of funds. m) The expenditure of funds on lands and facilities within the City or immediately adjacent to
and annexable to the City will be the highest priority for funding and that the expenditure of
funds on lands and facilities not immediately adjacent to but near the City provides direct
health and economic benefits to the citizens of the City and as such funds may be expended on projects outside and near the City which are not annexable (such as connecting trails from the City to National Forest or State lands and adjacent communities, and for preserving lands
outside the City that protect water quality within the City) as long as the projects benefit the
citizens of Bozeman.
n) It to be appropriate that the funds pay for an approved project’s transactions costs including
costs associated with appraisals, realtors, attorneys, documents, filing, and other similar
costs.
1.03. Proposed Project
1.04.
. The Commission determines there should be submitted to the electors of the City qualified to vote at bond elections the question of whether the Commission shall
be authorized to sell and issue bonds of the City in one or more series to obtain funds for the purpose
of on open space lands designing, constructing or equipping trails, parks and natural areas or multi-use recreational fields and facilities, or for use in the preservation or enhancement of water quality, and paying the costs of acquiring rights to or interests in or improving open-space lands in or near the
City (such as lands for trails in and around the Bridger Mountain foothills), to include necessary or
related, infrastructure for the use, enjoyment, or functioning of such lands or facilities and the
operation, maintenance, repair, management, or planning of such lands or facilities; and paying costs associated with the sale and issuance of such bonds, which bonds shall bear interest at rates to be determined by the Commission at the time of sale, payable semiannually during a term not to exceed
twenty (20) years for each series of bonds.
Estimated Cost
1.05.
. The estimated costs of acquiring rights to or interest in or improving
open-space lands in or near the City and all associated costs described in the ballot question below, and costs associated with the sale and issuance of the bonds, are _________________ Million and
No/100 Dollars ($__________). It is proposed that the City issue up to _______________________
Million and No/100 Dollars ($_____________) of its general obligation bonds for such purpose.
Debt Limitation. The Commission has determined that the issuance of general obligation bonds up to the total aggregate amount of __________________________And No/100 Dollars ($_____________) will not cause the City to exceed its general obligation indebtedness
limitation, which is currently calculated to be $74,875,000.00.
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1.06. Election
1.07.
. The Commission has determined there should be submitted to the electors of the City qualified to vote at bond elections the question of whether the Commission shall be
authorized to issue and sell general obligation bonds of the City to obtain funds for the purpose
described in the ballot question.
Bonds
Section 2.
. It is the judgment of the Commission that the aggregate sum of up to _____________ Million and No/100 Dollars ($_____________) in general obligation bonds will be necessary to carry out the purpose set forth above. It is also the judgment and determination of the
Commission that such general obligation bonds may be issued in multiple series, each series payable
during a term not to exceed twenty (20) years.
Calling of the Election
Shall the City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”)
be authorized to issue and sell general obligation bonds of the City in one or more series in an aggregate principal amount not to exceed ____________________________ Million and No/100 Dollars ($_____________) for the purpose of on open space lands designing,
constructing or equipping trails, parks and natural areas or multi-use recreational fields and
facilities, or for use in the preservation or enhancement of water quality, and paying the costs
of acquiring rights to or interests in or improving open-space lands in or near the City (such as lands for trails in and around the Bridger Mountain foothills), to include necessary or related,
infrastructure for the use, enjoyment, or functioning of such lands or facilities and the
operation, maintenance, repair, management, or planning of such lands or facilities; and paying
costs associated with the sale and issuance of such bonds, which bonds shall bear interest at rates to be determined by the Commission at the time of sale, payable semiannually during a
term not to exceed twenty (20) years for each series of bonds?
. The City Commission hereby calls and directs a special City election be held in conjunction with the general election on November 6, 2012, for the purpose
of voting on the following question:
Section 3. Conduct of Election
Section 4.
. All qualified electors of the City shall be entitled to vote at
the bond election. The City Clerk is hereby authorized and directed to give notice of the call and details of this election to the Gallatin County Election Administrator as soon as practicable and in
any event on or the before the date required by the Gallatin County Election Administrator. The
Gallatin County Election Administrator is requested to give notice of the close of registration and
thereafter prepare printed lists of the qualified electors in the City entitled to vote in the election in the City and to conduct the election in the form and manner prescribed by law.
Notice of Election. The City Clerk is hereby authorized and requested to cause
notice of the call and holding of the election to be given by publishing notice at least once a week for
the three consecutive weeks before the election in the Bozeman Daily Chronicle, a newspaper of general circulation in Gallatin County. The notice of election as published shall read substantially as shown on Exhibit A hereto (which is incorporated by reference and made a part hereof).
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Section 5. Form of Ballot
OFFICIAL BALLOT
. The ballot shall be printed in substantially the following form:
CITY OF BOZEMAN, MONTANA
GENERAL OBLIGATION BOND ELECTION
NOVEMBER 6, 2012
INSTRUCTIONS TO VOTERS: Make an X or similar mark in the vacant square before the words “BONDS--YES” if you wish to vote for the bond issue; if you are opposed to the bond
issue, make an X or similar mark in the square before the words “BONDS--NO”.
Shall the City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”) be authorized to sell and issue general obligation bonds of the City in one or more series in an aggregate principal amount not to exceed ____________________________
Million and No/100 Dollars ($_____________) for the purpose of on open space lands
designing, constructing or equipping trails, parks and natural areas or multi-use recreational
fields and facilities, or for use in the preservation or enhancement of water quality, and paying the costs of acquiring rights to or interests in or improving open-space lands in or near the City (such as lands for trails in and around the Bridger Mountain foothills), to include
necessary or related, infrastructure for the use, enjoyment, or functioning of such lands or
facilities and the operation, maintenance, repair, management, or planning of such lands or
facilities; and paying costs associated with the sale and issuance of such bonds, which bonds shall bear interest at rates to be determined by the Commission at the time of sale, payable
semiannually during a term not to exceed twenty (20) years for each series of bonds?
BONDS — YES
BONDS — NO
Section 6. Notice to County Election Administrator
. A copy of this Resolution will be
provided to the Gallatin County Election Administrator as soon as possible after its adoption and
approval in order to inform the Election Administrator of the details of the special election and the
pertinent requests and authorizations as to the conduct of the special election.
7. Reimbursement Expenditures
(a) The United States Department of Treasury has promulgated final regulations
governing the use of proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the City for project expenditures paid by the City prior to the date of issuance of such bonds. Those regulations (Treasury Regulations, Section 1.150-2) (the “Regulations”)
require that the City adopt a statement of official intent to reimburse an original expenditure
not later than 60 days after payment of the original expenditure. The Regulations also
generally require that the bonds be issued and the reimbursement allocation made from the proceeds of the bonds within 18 months (or three years, if the reimbursement bond issue qualifies for the “small issuer” exception from the arbitrage rebate requirement) after the later
of (i) the date the expenditure is paid or (ii) the date the project is placed in service or
.
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abandoned, but (unless the issue qualifies for the “small issuer” exception from the arbitrage rebate requirement) in no event more than three years after the date the expenditure is paid.
The Regulations generally permit reimbursement of capital expenditures and costs of
issuance of the bonds.
(b) Other than (i) expenditures to be paid or reimbursed from sources other than the bonds, (ii) expenditures permitted to be reimbursed under the transitional provision contained in Section 1.150-2(j)(2) of the Regulations, (iii) expenditures constituting preliminary
expenditures within the meaning of Section 1.150-2(f)(2) of the Regulations, or (iv)
expenditures in a “de minimus” amount (as defined in Section 1.150-2(f)(1) of the Regulations), no expenditures for a project within the scope of this resolution have been paid by the City before the date 60 days before the date of adoption of this resolution.
(c) The City reasonably expects to reimburse the expenditures made for costs of such
a project out of the proceeds of bonds in an estimated maximum aggregate principal amount
of up to $___________ after the date of payment of all or a portion of the costs of such a project. All reimbursed expenditures shall be capital expenditures, a cost of issuance of the bonds or other expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the
Regulations.
(d) As of the date hereof, there are no City funds reserved, allocated on a long-term
basis or otherwise set aside (or reasonably expected to be reserved, allocated on a long-term basis or otherwise set aside) to provide permanent financing for the expenditures related to
such a project, other than pursuant to the issuance of the bonds. The statement of intent
contained in this resolution, therefore, is determined to be consistent with the City’s
budgetary and financial circumstances as they exist or are reasonably foreseeable on the date hereof.
(e) The City’s financial officer shall be responsible for making the “reimbursement
allocations” described in the Regulations, being generally the transfer of the appropriate
amount of proceeds of the bonds to reimburse the source of temporary financing used by the City to make prior payment of the costs of the project. Each allocation shall be evidenced by an entry on the official books and records of the City maintained for the bonds or the project
and shall specifically identify the actual original expenditure being reimbursed.
PASSED by the City Commission of Bozeman, Montana, this 16th day of July, 2012.
CITY OF BOZEMAN, MONTANA
____________________________
Sean A. Becker, Mayor
Attest: ____________________________
Stacy Ulmen, CMC, City Clerk
(SEAL)
Approved as to form:
__________________________________
Greg Sullivan, City Attorney
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A-1
EXHIBIT A
NOTICE OF GENERAL OBLIGATION BOND ELECTION
City of Bozeman, Montana November 6, 2012
NOTICE IS HEREBY GIVEN by the City Commission (the “Commission”) of the City of
Bozeman, Montana (the “City”), that pursuant to a certain resolution duly adopted at a regular
meeting of the Commission on July 16, 2012, a special city election of the registered voters of the City will be held in conjunction with the general election on November 6, 2012, for the purpose of voting on the following question:
Shall the City Commission (the “Commission”) of the City of Bozeman, Montana (the
“City”) be authorized to sell and issue general obligation bonds of the City in one or more series in
an aggregate principal amount not to exceed ____________________________ Million and No/100 Dollars ($_____________) for the purpose of on open space lands designing, constructing or
equipping trails, parks and natural areas or multi-use recreational fields and facilities, or for use in
the preservation or enhancement of water quality, and paying the costs of acquiring rights to or
interests in or improving open-space lands in or near the City (such as lands for trails in and around the Bridger Mountain foothills), to include necessary or related, infrastructure for the use, enjoyment, or functioning of such lands or facilities and the operation, maintenance, repair, management, or
planning of such lands or facilities; and paying costs associated with the sale and issuance of such
bonds, which bonds shall bear interest at rates to be determined by the Commission at the time of
sale, payable semiannually during a term not to exceed twenty (20) years for each series of bonds?
The polls shall be open between the hours of 7:00 a.m. and 8:00 p.m., and the polling places
for the election shall be the normal polling places for City residents during a general election.
Beginning October 9, 2012, absentee ballots may be obtained at the office of the Gallatin County Election Administrator at Gallatin County Courthouse, 311 West Main, Gallatin, Montana, until 12:00 noon, November 5, 2012.
DATED this ____ day of ______________, 2012.
Gallatin County Election Administrator
Publish: [October 16, 2012 October 23, 2012 October 30, 2012]
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Commission Memorandum
REPORT TO: Honorable Mayor and City Commission FROM: Chris Mehl, City Commissioner
SUBJECT: Potential Parks and Trails Bond Policy Discussion
MEETING DATE: June 18, 2012
AGENDA ITEM TYPE: Action
RECOMMENDATION: Consider information presented and provide staff with direction to prepare a motion to be considered in July for the City Commission to place a referendum on the
November ballot authorizing the City to sell bonds for to acquire money purchase and
improvement of parks, trails, recreation fields, and preserving water quality along creek and
stream corridors.
SUMMARY: Bozeman’s parks, trails, and recreation fields contribute to our region’s high
quality of life, enhance our public health, create safe, accessible opportunities for outdoor
recreation and transportation, help attract and retain businesses, improve the sense of community
by creating outdoor gathering spaces, and increase property values.
Investing now in parks, trails, recreation fields, and preserving water quality (e.g., water
corridors such as Bozeman Creek) also makes sense as property values have lowered
significantly in the past several years and the borrowing costs for a bond also remain quite low.
Bozeman is expected to grow again, and a bond will help preserve and enhance our quality of
life while serving our community and using careful planning and consideration to create new parkland in the fastest-growing parts of town to make larger, more cohesive parks that are more
substantial than the typical “pocket parks” for newer developments. A bond also could help in
the development of athletic fields that will help draw in larger tournaments, creating an
economic benefit for our community.
A survey of Bozeman residents conducted as part of the 2007 Bozeman Parks, Recreation, Open
Space, and Trails (PROST) plan identified “more and/or better trails” as the highest
recommendation for improving Bozeman’s facilities, followed by parks, and then by open space.
A private opinion survey conducted this year, discussed in detail later, also showed strong public
support for either a $10 million or $15 million parks/trails bond, both by two-to-one ratios.
The 2007 PROST Plan, unanimously adopted by the City Commission and created with
considerable public input, identified the need to expand and improve the City’s parks and trails
system, and called for the City to consider a bond for the purchase of trails and parkland.
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Responding to public interest, last summer (July 2011) the City Commission voted to analyze the
feasibility of a possible bond to protect water quality and increase and improve trails, parks, and
outdoor recreation in the City. Also, at the start of this year, the City Commission made a bond
for parks, trails, and recreation one of its priorities for 2012. During the past twelve months, a number of residents have been meeting with City Staff and Commissioners to discuss costs, needs, locations, and benefits of a bond. It is with the grassroots urging of these groups, that this
issue has been placed on the agenda for consideration.
The cities of Helena and Missoula have passed open space bonds. Missoula City and County residents voted to fund a $5 million open space bond in 1995 and a $10 million open space bond
in 2006 with the money split between the two jurisdictions. Helena voted in 1996 for a $5
million open space bond.
Unlike those cities, Bozeman does not have a dedicated fund for acquisition and improvements of public parks, trails, and recreation fields. This Policy Memo discusses a possible bond that could be placed on the ballot this November, including background, need, the benefits and costs,
accountability, and how such a mechanism could work should the City decide to put a bond
measure to the voters for their judgment.
UNRESOLVED ISSUES: The Memo concludes with a series of clarifying questions the Commission should address along with possible language and funding levels for a potential
bond. Other issues may be identified by the City Commission.
FISCAL IMPACT: Bond values of both $10 million and $15 million have been discussed. City staff estimates that the maximum cost for a “typical household” for a $10 million bond would be just under $30 annually, and just less than $45 a year for a $15 million bond. Details
of the City’s bonding capacity and costs to the City and taxpayers are discussed in depth in the
following memo.
ATTACHMENTS: Examples of other Montana city bonds
Polling Memo: Public Opinion Strategies Memo: “Key Findings from a Survey of Bozeman
Residents Regarding Support for Bond Measure to Fund Trails, Natural Areas, Water Quality, and Outdoor Recreation Areas”
Report Compiled on June 7, 2012
This memo was prepared with the help of Ron Dingman, Brit Fontenot, Anna Rosenberry, Greg Sullivan, Thom White, and Chuck Winn.
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CONTENTS: Background: PROST, Feasibility, Meetings with User Groups (pp. 3-4)
Need, Public Health, Safety, and Economic Benefits (pp. 4-7)
Possible Projects, Cost of Land, Borrowing, Existing County Bond (p. 7) Public Support and Partnerships (pp. 7-9)
How It Would Work (pp. 9-14)
Costs, Maintenance, and Other Priorities (pp. 14-17)
Accountability and Metrics (p. 17)
Questions, Possible Ballot Language, and Suggested Motion (pp. 17-19)
BACKGROUND For a number of years Bozeman’s slogan has been “Bozeman: The Most Livable Place” and the
City’s parks, trails, open space, and other programs play an important role in meeting that
objective.
The 2007 Parks and Trails Plan is the planning document the City utilizes concerning parks and
outdoor recreation. The full PROST Plan is at:
http://www.bozeman.net/Smarty/files/78/78215f19-19b9-44c0-8fd9-7df9068aebe0.pdf.
A map of PROST Plan identifying existing and proposed trails can be found at:
http://www.bozeman.net/Smarty/files/47/474f9f7f-e1ad-4c2d-81b6-e3c46bb0c5b9.pdf.
The PROST Plan provides both policy recommendations along with the results of a small
residential survey. The survey results showed that hiking/walking was the number one activity among all age groups, followed by biking and cross country skiing. When asked to select the top
three recreational facilities used, residents selected trails, parks, and open space in that order.
The survey also noted, “When asked to think of a recommendation to improve the City’s
recreation opportunities, more and/or better trails was the most frequently listed response.” Respondents also selected trails as the top “additional” recreation facility they wanted to see and
that “more and/or better trails” should be the highest priority of the City.
On the policy and goals side, PROST identifies the establishment of “regular and sufficient
funding sources to acquire, develop, and maintain public parks, trails, and recreational facilities” as a top goal (#3). Other related goals include expanded public accessibility (1), partnerships
with local groups and the school district (4), connections of existing and expanded trails (5),
usability and proper location of facilities (6), and planning for acquiring or preserving significant
open space and expanding the City’s trails system (10).
Under its Recommendations in Chapter 10, PROST calls for expanding the parks and trails
system, making sure that it reaches underserved areas of the City, and exploring an open space
bond. The PROST plan also states that an open space bond would provide the opportunity for
the City to be proactive in the selection and purchase of land for the purpose of connecting trails
and placing sports facilities where they make the most sense; both for need and cost.
Last summer, as noted in the Summary above, responding to inquiries from a number of citizens,
the City Commission unanimously requested technical advice from the Trust for Public Land
(TPL) on a number of fiscal and legal issues surrounding a potential bond. TPL prepared a
background report, met with all five City Commissioners, and the report also was shared with City Staff.
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Since then, the City Commission has made a possible parks and trails bond a priority for this
year, and a number of Bozeman groups, individual citizens, and business leaders representing a
variety of outdoor recreation uses (including organized sports such as soccer, rugby, and lacrosse; trail users; bikers; skiers; those interested in Bozeman Creek; etc.) have met a number of times with City Staff from the Parks Department along with several Commissioners. Also, the
proposed fiscal year 2013 budget highlights a number of objectives for the Parks Department
including to “acquire and develop new parks,” “providing an adequate number of sports fields,”
“to continue adding, upgrading, and maintaining safe, quality sports fields and equipment,” and “to improve, maintain, and expand the trail system.”
NEED, PUBLIC HEALTH, SAFETY, AND ECONOMIC BENEFITS
City Staff note that Montana cities average roughly twenty acres of parkland per 1,000 people
and Bozeman currently has roughly 19 acres per 1,000 people within City limits. As noted earlier, the PROST plan calls for expanding the capacity of the City’s parks and trails.
For example, in Chapter 7, the PROST plan recommends making trail connections where we
have gaps. In Chapter 10 it recommends more Dog Parks and Multi-Use fields under the Top
Ten Capital Facility Recommendations. Under the Top Ten Non-Facility Recommendations it lists “Evaluate and implement new methods of acquiring and improving park land.” City Staff also have identified a “real weakness” in the City’s east to west trail connections and also the
desire to make connections between the Bozeman Pond, Rose Park, and the Regional Park.
[Note: This also could allow us to connect with a pathway to Belgrade, which is identified as a
priority in the PROST plan and could be done in partnership with that city and Gallatin County.] City Staff also recommend possibly looking at how to complete the connections from Bozeman to the “M” and to the Gallatin Range.
Bozeman also is hampered in our ability to host large outdoor sports tournaments in Bozeman
because of the lack of fields and adequate facilities. Bozeman has had good success in bringing indoor tournaments to the City, but not as much for similar outdoor events. As an example of this need, the recently submitted budget proposal for the Bozeman Tourism Business
Improvement District (TBID) identified a number of strengths and challenges facing the
community, and highlighted “limited sport/event fields and facilities” as one of the missed
opportunities in Bozeman. Public Health and Safety
As noted earlier, additional and improved parks and trails will provide significant public health
benefits, provide adequate space for children and families to play, and will provide safer routes
to schools and to places of work. Studies show that families who live closer to parks and trails have decreased rates of obesity and related diseases. Completing trail connections also provides expanded non-motorized transportation routes, which can especially benefit children by
providing safe routes to school, and the underserved portion of our population that does not or
cannot drive motor vehicles.
Economics This section discusses the economic value of parks and trails, notes what other Montana cities
are doing, and evaluates the impact of parks and trails as part of a higher quality of life that helps
retain and attract new businesses, and increase real estate values. As noted immediately above,
the expansion of parks, trails, and fields also should help expand tourism to the region through
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increased sports tournaments. Similar communities have seen significant revenue to local
businesses as a result of outdoor athletic tournaments.
The City’s Economic Development Plan (http://www.bozeman.net/Smarty/files/06/064cfc00-949e-4e95-ab82-2c05a4ae0b55.pdf) repeatedly notes the importance of Bozeman maintaining
and building upon its high quality of life as both an economic attractant and as a way to help
existing businesses grow and prosper. The plan notes a number of advantages Bozeman already
has compared to other cities—such as the historic Downtown, Montana State University, the
hospital, retail center, and good school system.
One of the priorities of the city’s economic plan is to continue attracting new economy firms—
businesses which could be located anywhere in the United State but choose to locate and/or
expand in Bozeman because of the region’s high quality of life and other factors. Parks, trails,
and recreation fields are part of this equation, and other cities, such as Helena and Missoula, have already passed bonds to expand and improve their outdoor recreation.
Also, the Billings Chamber of Commerce recently set five strategic priorities for 2011-2012, one
of which is to “develop the Billings trail system for the economic and healthy community
benefits that result from active transportation (to work and school and for leisure). The Board, staff and Trails Committee members will help communicate the quality of life and economic
benefits of trails.” (http://billingschamber.com/site/annual-priorities/)
Business and academic literature is increasingly citing the importance of quality of life for 21st
Century growth. For example, a study done at the University of North Carolina for the U.S. Department of Commerce found that:
Traditionally, the location decisions of firms have been driven primarily by
factors such as land costs, labor costs and access to materials and markets.
Today, however, quality of life for employees is becoming an important factor as well, particularly for knowledge–based industries such as
telecommunications, computers, entertainment, and biotechnology that are part
of the so–called New Economy….
An increasing number of firms are seeking locations that will attract and retain a well–educated work force. Thus, areas offering cultural and recreational amenities (e.g., theaters and bike trails) could have a competitive advantage over
places that do not. (The Importance of Quality of Life in the Location Decisions
of New Economy Firms)
Another study found similar results, noting that “quality of life has a major impact on a place’s ability to attract well-educated and talented workers.” The report, How Cities Use Parks for
Economic Development, further states in its executive summary that:
Parks provide intrinsic environmental, aesthetic, and recreation benefits to our
cities. They are also a source of positive economic benefits. They enhance
property values, increase municipal revenue, bring in homebuyers and workers, and attract retirees. At the bottom line, parks are a good financial investment for
a community. Understanding the economic impacts of parks can help decision
makers better evaluate the creation and maintenance of urban parks.
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The importance of quality of life as an economic driver can be seen locally in the results of the
Economic Summit held in Bozeman earlier this year. Business leaders attending the summit
highlighted three assets and positive attributes of our community. In addition to education and diversified economy, the number one attribute was broadly described as “quality of life” which included recreational opportunities, cultural and natural amenities, and other factors.
Numerous other studies also have shown that parks and open space increase the value of
neighboring residential property. For example, a study completed earlier this year, The Economic Benefits of Open Space and Trails in Pinal County, Arizona, found that “Parks and
protected open space increase the value of nearby residential properties because people like
living close to parks and protected open spaces and are willing to pay for the privilege.”
Most similar studies have found that preserving open space land generally, but not always, increases the property value of nearby homes. The studies use a variety of methods to determine this, and consider such variables as the type, location, and use of the open space, (large rural
areas or city parks; passive vs. active recreational use) and the distance between the open space
property and the residential property in question.
Three additional reports summarize the methodology and results of these studies: The Impact of
Parks and Open Space on Property Values and the Property Tax Base, commissioned by the
National Recreation and Park Association; The Value of Open Space: Evidence from Studies of
Nonmarket Benefits, by Resources for the Future, a national nonprofit organization; and
Economic Impacts of Protecting Rivers, Trails and Greenway Corridors, prepared for the National Park Service. According to the Impact report, the economic contributions of public park land and open space
are twofold: first, they often increase nearby property values (resulting in more property tax
revenue to the town). Second, the town avoids costs associated with providing municipal services to a residential development that might otherwise be located on the site.
The Impact report notes that “the real estate market consistently demonstrates that many people
are willing to pay a larger amount for a property located close to parks and open space areas than
for a home that does not offer this amenity.” The Impact report reviewed 25 studies on the impact of parks and trails to residential values and found that 20 of the results showed an increase.
The Rivers, Trails and Greenways study states that the real estate industry found that 77.7
percent of home buyers and shoppers rated natural open space as either “essential” or “very important” in planned communities. The Rivers, Trails and Greenways study also notes that increases in property values depend upon the ability of developers and planners to minimize
potential homeowner-park use conflicts and provide access to the open space and the views it
offers.
The Impact report carefully cautions that is hard to quantify the impact of open space on property values because of the many different types and uses of open space, the various uses of the land
surrounding them, and other factors. That said, the report then states that a 20 percent increase in
value for property adjoining or fronting a passive-use park is “a reasonable starting point.” The
increase is higher if the park is large, well maintained and primarily used for passive purposes, such as hiking. The increase is lower for property that abuts smaller open space tracts or open
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space used for active recreation, such as ball fields. Distance from the open space also plays a
role. Property owners living closer to open space enjoy a greater benefit than those whose homes
are further away.
POSSIBLE PROJECTS, COST OF LAND, BORROWING, EXISTING COUNTY BOND This section lists a sample of possible projects that could be funded by a bond:
• Trail connections that close critical gaps to make our system safer, provide safer routes to
schools, and create more access to our parks;
• Improvements to parks and trails that will help protect Bozeman Creek, such as redesigning Bogert Park;
• Expansion of existing parks to enhance recreational opportunities;
• The development of athletic fields to draw in larger tournaments, creating a new economic benefit for our community;
• Purchase the East Gallatin Recreation Area if the state decides to liquidate it;
• Expansion of the Bozeman Pond park and trail system;
• Development of East-West trail connections to provide expanded non-motorized
transportation options; and
• Creation of neighborhood parks in the newest parts of town, where “pocket” or linear parks created through new developments are not adequate to meet the community’s needs.
Low Land and Borrowing Costs
Now is a good time to buy land because of relatively low prices; which are sometimes half, or even less, than what they were five or six years ago. Land prices may differ for a variety of reasons, but as the Chronicle noted in a March 4, 2012 story: “The school district recently paid
$27,500 per acre to buy land for a new elementary school. In the past, the district paid twice as
much, $52,500 an acre for a future high school site and $90,000 an acre for the new Chief Joseph
Middle School site.” In addition, borrowing costs also are low, often at less than three percent. The recent refinancing
of a number of the City’s debt obligations to save money by capturing significantly lower
interest rate shows the benefits of borrowing at current rates.
City Bond-County Bond This proposed bond would be City only, and a number of City residents have asked about how
this is different from the Gallatin Open Space Measures passed in 2000 and 2004. Funds from
the Gallatin County Open Space Measure were used across the County, including the 100-acre
park, but predominantly for the acquisition of conservation easements to protect open spaces within the County, primarily working farms and ranchland. Funds from the Bozeman measure will be focused on purchasing land from willing sellers for the benefit of Bozeman residents, and
with public access to all citizens, with the emphasis on protecting water quality and natural areas,
and the creation and improvement of trails, parkland, and outdoor recreation opportunities.
PUBLIC SUPPORT AND PARTNERSHIPS Details of the public survey from the 2007 PROST plan were discussed earlier. In addition, the
Recreation and Parks Board has voted in support of this proposed bond measure in May 2012.
In addition, there is strong public support for a bond. Earlier this year, a number of parks and trails supporters, groups, and businesses raised private funds to pay for a poll by Public Opinion
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Strategies, a nationally recognized polling firm that conducts surveys for the Wall Street Journal
and many other outlets.
That poll showed two-to-one support for a bond, either for $10 million or for $15 million, and that residents “connect these investments to protecting their quality of life.” The poll also showed that “initial solid support levels became more intense and stronger as voters learned
more” about the costs, benefits, and possible operation of a bond.
The pollster’s memo is attached. Highlights include:
• The Numbers: Given sample bond language 62% indicate they will vote yes in support
of the $10 million measure and 69% yes in support of the $15 million measure. More
than one-quarter in either case indicate they will “definitely” vote Yes. One-quarter or
fewer (25% and 19% respectively) say they would oppose the measure.
• Support is broad-based and wide-spread. Given the lack of significant distinction between the two amounts tested, we can combine the samples and examine sub-groups as
a whole. There is significant support among many key sub-groups, including…
o Men (65% Yes) and women (60%); o Younger voters under age 45 (70%), age 45-54 (58%), age 55-64 (64%) and seniors (56%); and
o Parents (61%) and those without children at home (68%).
• Voters respond positively to a range of ways funds are used in their community.
Proposals such as preserving water quality, protecting the community’s quality of life, improving trails, preserving natural areas, and improving natural parks all scored highly.
• Managing the funding: City residents have confidence in the City to manage these
funds well. Nearly three-quarters (74%) say that they are either very confident (19%) or
somewhat confident (55%) that the city would handle these funds well.
• Accountability provisions incorporated into the ballot language would make voters more likely to support the measure. Issues such as requiring that funds be used solely
for parks, trails, and natural areas; an annual audit; the review of a local citizens
committee; and an automatic sunset all gave respondents more confidence the funding
would be used wisely.
• In summary, “Bozeman residents are supportive of a measure which would bond to fund
trails, natural areas, water quality and areas for outdoor recreation. Residents make the
connection between these elements and their good quality of life and want to see that
maintained.”
Local Groups and Partnerships
As noted earlier, a number of local groups have been meeting and have expressed interest in the
possibility of a parks, trails, and recreation fields bond. The PROST plan calls for increased
partnerships, both with local groups and with the schools. Existing partnerships, such as that with the Gallatin Valley Land Trust, Rotary Club, Optimists, and other civic groups, already
provide volunteer support to the City’s parks and trails. Recently, a number of Bozeman groups
have expressed interest in the idea of potential partnerships that would save and stretch taxpayer
dollars. For example, several outdoor recreation groups (soccer, rugby, lacrosse, etc) are
exploring the idea of signing an MOU with the City to provide some or all maintenance for new or upgraded recreation fields.
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In addition, a number of landowners—whether families, businesses, or banks—have indicated
that they would be receptive to selling land now and working with the City and others to secure a
fair and reasonable return on taxpayer dollars.
Some of the user groups, businesses, and organizations that have expressed interest in this concept include:
Big Sky Wind Drinkers
Blitzz Soccer Club
Bozeman Area Bicycle Advisory Board Bozeman Creek Enhancement Project Bozeman Women’s Activity Group
Bridger Ski Foundation
Gallatin Valley Lacrosse
Gallatin Valley Land Trust GallEP Montana Conservation Voters (Gallatin/Park Chapter)
Northern Lights Trading Company
Oboz Footwear
REI Run Dog, Run Sonoran Institute
Trust for Public Land
Wilderness & Recreation Partnership
HOW IT WOULD WORK This section discusses how a possible bond would work and related details. In addition, the bond
counsel who assisted the City in refinancing its current bonds will attend the Commission
meeting and will be able to answer additional questions that may arise. One advantage of a bond
is that the language of the ballot measure authorizing the bond restricts money only to be used for explicit, clear purposes.
Note: The City Attorney provides the information in this next section related to the legal
authority for the sale of bonds. If the Commission decides to move forward additional legal
review will be required. Please note, the City has retained outside bond counsel to assist the City should the Commission move forward.
There are two statutory frameworks that provide authority to call for an election for the sale of
bonds to support parks and trails: Title 7, Chpt. 16, Part 41, MCA (cultural/social/recreational
facilities) and the Montana Open Space Act (Title 76, Chpt. 6, MCA). Examples of using both frameworks for bonding by Bozeman and other Montana cities are attached to this memo. Generally, the first option (Title 7, Chpt. 16) has been used for structures and the second option
(Title 76, Chpt. 6) has been used for parks, trails, water quality, and open space bonds.
Examples of other bonds:
• Gallatin County open space bond 2004
• City of Helena open space bond 1996;
• Missoula County/City open space bond 2006;
• City of Kalispell pool bond 2002;
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• Bozeman Public Library bond sale 2001; and
• Missoula aquatics facilities 2003. The first part of this section discusses these two frameworks including the scope of projects that
could be funded and the statutory limits on indebtedness. The next part of the memo will discuss
generally the process for selling general obligation bonds.
I. Specific Statutory Authorization For the Sale of Bonds to Fund Parks/Trails Montana law provides two statutory frameworks authorizing the issuance of general obligation
bonds to provide funding for the purchase of lands or rights-of-way for parks and trails and for
the purposes identified in the sample ballot language [included at end of memo].
a. Title 7, Chpt, 16, Part 41, MCA (Cultural, Social, and Recreational Facilities)
Sect. 7-16-4104, MCA, provides specific authority for a municipality to “contract an
indebtedness… by issuing bonds:”
7-16-4104. Authorization for municipal indebtedness for various cultural, social, and recreational purposes. (1) A city or town council or commission may contract an indebtedness
on behalf of the city or town, upon the credit of the city or town, by borrowing money or issuing bonds:
(a) for the purpose of purchasing and improving lands for public parks and grounds; (b) for procuring by purchase, construction, or otherwise a swimming pool facility, athletic
field, skating rink, playground, museum, golf course, site and building for a civic center, youth center, or any combination of these facilities; and
(c) for furnishing, equipping, repairing, or rehabilitating a swimming pool facility, athletic field, skating rink, playground, museum, golf course, civic center, or youth center.
(2) (a) The total amount of indebtedness authorized to be contracted in any form, including the existing indebtedness, may not at any time exceed 0.9% of the total assessed value of taxable
property, determined as provided in 15-8-111, within the city or town, as ascertained by the last assessment for state and county taxes prior to the incurring of the indebtedness.
(b) Money may not be borrowed for any purpose on bonds issued for the purchase of lands and improving the land until the proposition has been submitted to the vote of the qualified electors of
the city or town and a majority vote is cast in favor of the proposition.
The above statute specifically allows the sale of bonds for three distinct purposes: (i) purchasing
and improving lands for public parks and grounds; (ii) for procuring by purchase, construction, or otherwise a swimming pool facility, athletic field, skating rink, playground, museum, golf
course, site and building for a civic center, youth center, or any combination of these facilities;
and (iii) for furnishing, equipping, repairing, or rehabilitating a swimming pool facility, athletic
field, skating rink, playground, museum, golf course, civic center, or youth center.
The City Commission may rely upon the authority granted to it by this section to adopt a
resolution putting before the voters the question of whether to sell bonds for park and trail
purposes. It is important to note this provision authorizes only the purchase and improving of
lands for parks, the purchase or construction of the types of active recreational facilities listed in
subsection (1)(b) and for furnishing, equipping, repairing, or rehabilitating the facilities listed in subsection (1)(c).
If this part is to provide the authority for issuing of bonds the language of the ballot must
necessarily reflect the statutory provisions and the use of bond proceeds will be limited to the
purposes enumerated in this part or as further restricted by the ballot language.
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While this part of the MCA does not include the term “maintenance” it allows for furnishing,
equipping, repairing, or rehabilitating those facilities listed in subsection (1)(c). In 1986,
Montana Attorney General Greely stated, in referring to a previous version of 7-16-4104, which at that time did not authorize repair or maintenance, “The word ‘maintenance’ has been held to be synonymous with ‘repair.’” 41 Mont. Op. Atty. Gen. 301 (1986) (internal citations omitted).
As you can see, the Legislature later amended 7-16-4104 to include the terms repair and
rehabilitation. As such, it appears the addition of the term “repair” into 7-16-4104(1)(c), MCA,
authorizes the use of bond proceeds for maintenance of the facilities enumerated in subsection (1)(c): a swimming pool facility, athletic fields, skating rinks, playgrounds, museums, golf courses, a civic center, or a youth center. If the Commission is interested in using 7-16-4104 as
the authority to sell bonds for parks and trails, the City Attorney requests the ability to further
research the authority to use bond proceeds for “repair and rehabilitation.”
Pursuant to Sect. 7-16-4104(2), MCA, the amount of indebtedness the City will be limited to authorizing in its sale of bonds is 0.9% of the “total assessed value of taxable property,
determined as provided in Sect. 15-8-111 [MCA] within the city or town…” According to the
State of Montana Department of Revenue, the “total assessed value of taxable property” is
equivalent to the “taxable market value.” As such, 0.9% of the taxable market value for FY2012 is $26,955,000.
The City does not currently have any outstanding indebtedness under this provision of Montana
law. As such, all of this indebtedness capacity is currently available. However, if the
Commission moves forward with adopting a resolution to put the sale of bonds before the voters the Commission should engage bond counsel to not only oversee the process, provide an opinion on specific ballot language, but also to opine on the following question:
• Is the 0.9% limit provided for in 7-1-4104(2), MCA, in addition to or subject to the bond limit provided for in Sect. 7-7-4201, MCA (restricting a city or town from issuing bonds or incurring other indebtedness for any purpose in an amount
that with all outstanding and unpaid indebtedness exceeds 2.5% of the total
assessed value of taxable property).
b. The Montana Open-Space Land and Voluntary Conservation Easement Act (Title 76, Chpt. 6, MCA) (the “Open Space Act”)
The Open Space Act provides specific authority to local governments to issue “for the purposes
of [the Open Space Act] general obligation bonds in the manner and within the limitations prescribed by the applicable laws of the state…” 76-6-109(2), MCA.
The purposes of the chapter are listed in 76-6-103, MCA, and include “provid[ing] for the
preservation of… open space land…” 76-6-103(2), MCA. The term “open space lands” is
defined in the Open Space Act: (3) "Open-space land" means any land which is provided or preserved for:
(a) park or recreational purposes;
(b) conservation of land or other natural resources;
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(c) historic or scenic purposes; or
(d) assisting in the shaping of the character, direction, and timing of community
development.
76-6-103, MCA. As such, the proceeds of a bond sale authorized under the Open Space Act can be used for “park
and recreational purposes.”
In 1996, the voters of the City of Helena authorized the sale of bonds under the authority of the Open Space Act. The City of Helena requested an Attorney General opinion on the use of bond proceeds “for the purpose of purchasing and improving lands for public parks and grounds, as
well as for the purchase and construction of athletic fields.” 47 Mont. Op. Atty. Gen. No. 8
(1997). The first question was whether the Open Space Act authorized the use of proceeds from
the sale of bonds for such purposes or, rather, should the City of Helena have relied upon the provisions discussed above under 7-16-4104, MCA. Attorney General Mazurek noted first the resolution put before the voters cited to the Open Space Act and after analyzing the provisions of
the Open Space Act determined “the restrictions in 7-16-4104 do not apply.” Id.
The City of Helena also inquired as to whether the proceeds from the sale of bonds could be used for maintenance of lands purchased with bond money. The Attorney General noted 76-6-109(1)(e) authorizes the use of proceeds from the sale of bonds for maintenance, operation, and
repair and thus stated Open Space Act bond proceeds could be used for maintenance of land
acquired “by the expenditure of the bond proceeds.” The Attorney General cautiously noted the
City of Helena did not inquire “as to expenditure of bond proceeds to maintain open-space land not acquired by expenditure of bond proceeds” and therefore specifically expressed no opinion on the matter. Id.
As for the limit on indebtedness, the amount of indebtedness that can be assumed under
the Open Space Act limit is the general indebtedness limit for the City found at 7-7-4201, MCA. As of FY2012, that debt limit is $70,249,000.00 (see table below).
If the Open Space Act is to provide the authority for issuing of bonds the language of the ballot
must necessarily reflect the statutory provisions and the use of bond proceeds will be limited to
the purposes enumerated in the Open Space Act or as further restricted by the ballot language.
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Legal Debt Limit—G.O. Estimated June 30,
2012
Statutory G.O Debt Limit—2.5% of Valuation $74,875,000
Less: Outstanding GO Bonds (being refinanced as we speak, could go lower) Library, Series 1 & 2 ($2,310,000)
Transportation ($810,000)
($3,120,000)
Less: Loans Payable
Fire Station #3 ($234,000, could be lower depending on impact fees)
South 8th Ave ($1,272,000)
($1,506,000)
Plus: Fund Balances Reserved for Debt Payment -
Equals: Legal Debt Margin $70,249,000
The anticipated legal debt margin as of June 30, 2013 will be $72.7 million.
II. Procedures for Selling General Obligation Bonds
Note: The City Attorney also provided the information in this section.
Regardless of the specific authority the Commission chooses to rely upon as discussed above, the
City will be subject to and must follow the requirements of Title 7, Chpt. 7, Parts 41 and 42,
MCA, as it sells general obligation bonds.
The limit on indebtedness has been discussed above.
Bonds may not be issued for a period of longer than 20 years. 7-7-4205.
Whenever the City Commission considers it necessary to issue bonds that pledge the general credit of the city for any purpose authorized by law, the question of issuing the bonds must be
submitted to the registered electors of the City. 7-7-4221.
To call the election, the Commission must adopt a resolution or a valid petition meeting the
requirements of the law must be presented to the City Clerk. 7-7-4223.
The resolution must comply with the requirements of 7-7-4226(2), MCA. Specifically, the
resolution must:
(a) recite the purpose or purposes for which it is proposed to issue the bonds;
(b) fix the amount of bonds to be issued for each purpose; (c) determine the number of years through which the bonds are to be paid, not exceeding the
limits fixed in 7-7-4205; and
(d) unless the bonds are revenue bonds not pledging the general credit of the municipality,
make provisions that are necessary for submitting the question to the registered electors of the
city or town at the next general city or town election, at an election that is conducted by mail ballot, as provided in Title 13, chapter 19, or at a special election that is held in conjunction with
a regular or primary election and that the governing body may call for the purpose.
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Under 7-7-4226(2)(d), the resolution must contain the specific ballot language the Commission
that will be presented to the voters. If the Commission moves forward and adopts a resolution,
the Commission can put the question to the voters at the federal/state regular election to be held on November 6, 2012. That election will be a special election of the City. Only a simple majority of the Commission is required to put the question of selling general obligation bonds before the
electors. The deadline for transmitting the resolution containing ballot language to the Gallatin
County Clerk and Recorder/Election Administrator is August 13, 2012. As such, the
Commission’s last date to take action on a resolution will be August 6, 2012. After adoption of the resolution described above, the City must give “separate notice of the
election.” 7-7-4227. The notice must contain specific information. 7-7-4227(2) and must be
published and posted. 7-7-4227(3).
A majority of votes cast at the election determines whether the voters approved or rejected the bond proposition. 7-7-4235.
After the election, the staff will work with bond counsel to prepare resolutions and to sell the
bonds pursuant to the procedures of 7-7-4251 – 4261. If the voters approve the sale of bonds and the bonds are sold, the Commission must, “at the time
of making the levy of taxes for general city [] purposes… levy a separate and special tax upon all
taxable property in the city…” 7-7-4265. If the sale of bonds is through the Open Space Act,
certain types of real property may not be taxed. See 76-6-109(3), MCA (prohibiting the levy of property taxes under the Open Space Act to agricultural and forest land and certain improvements thereon).
COSTS, MAINTENANCE, AND OTHER PRIORITIES
The table immediately below estimates annual costs to a “typical household” for both a $10 million and $15 million bond. See the notes and subsequent tables for further clarification on costs to taxpayers over the life of the bond.
Estimated Typical
Household
Current 20 yrs, 3%
Tax Per Year Cost Per Mill Mills Mill Value Annual Debt Service Total Bond Issue
$ 44.47 $ 3.71 11.99 $ 83,769.00 $ 1,004,000.00 $15 Million
$ 29.67 $ 3.71 8.00 $ 83,769.00 $ 670,000.00 $10 Million
These are strictly estimates. The 20 Year Muni Bond Scale is at 2.82% today.
What will be the continued tax levy effect of the bond issue, for Bozeman property tax payers after the first year? Because Bozeman’s tax base continues to grow each year, a declining
amount of taxes for debt service would be needed from each property owner. The City will have
more properties to share the burden of paying for the bonds. For instance, assuming a two
percent growth in taxable value for each year after the first year; the tax per year from a typical
residence would decrease approximately 9.5% from the first year amount during the first five years.
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Estimated Change in Tax Per Year on Typical Resident, $10M Example
Estimated
Tax Per Year
Typical
Cost Per
Mill Mills
Estimated
Mill Value, 2%
Growth
20 yrs, 3%
Annual Debt
Service
Total Bond
Issue
FY13 $29.67 3.71 8.00 $83,769.00 $670,000.00 $10 Million
FY14 $29.09 3.71 7.84 $85,444.38 $670,000.00 $10 Million
FY15 $28.52 3.71 7.69 $87,153.27 $670,000.00 $10 Million
FY16 $27.96 3.71 7.54 $88,896.33 $670,000.00 $10 Million
FY17 $ 27.41 3.71 7.39 $90,674.26 $670,000.00 $10 Million
FY18 $ 26.88 3.71 7.24 $92,487.74 $670,000.00 $10 Million
How will interest rates and other market factors influence the bond sale(s)?
That being said, the voters (tax levy) each year will pay off the debt that has been issued. If the first couple of years have less than $10 million outstanding, the tax levy will be proportionally
less, until the full amount of bonds are issued.
If passed, the City will be asking the voters to approve a total Face Value of bonds to be issued. For instance,
“Approve $10 Million in General Obligation Bonds…” When the voters approve this type of
ballot measure, they are obligating themselves to pay back the face value of the bonds, PLUS
interest over the life of the bonds at the market rate of interest when the bonds are issued. The
interest rate market will not affect the total amount of money available to the program, but it will affect the amount of taxes necessary to pay off the debt each year. Because of some IRS rules,
Finance Director Rosenberry reports that the City would want to time the issuance of the bonds
so that we do not have large sums of bond money on hand for years on end, unspent on
parks/trails. If approved for $10 million, for example, we may potentially have two or three
bond sales ($2-4M each) to coincide with how we plan to spend the money.
Maintenance
The proposed bond measure focuses primarily on acquiring land because this is an historic opportunity to purchase land for low cost and at favorable financing—and waiting could make future purchases significantly more costly or even cost prohibitive. This does not mean that the
City cannot take seriously the need to properly maintain its parks and trail system. Currently, the
City does this annually through a process designed to make sure that the maintenance budget is
targeted and well-spent while working with volunteers to keep costs down. This section first reviews current maintenance issues, outlines options for future maintenance,
and then lists costs of maintaining various park units to provide a general understanding of costs
and potential future expenditures.
The 2007 PROST plan noted that “City residents are largely satisfied with park maintenance;
with 86 percent of respondents indicating that park maintenance is Excellent (12 percent), Good
(43 percent) or Adequate (31 percent).”
In terms of staffing, Missoula currently runs its Park Division with 20+ FTEs. By comparison Bozeman has less than 14 and the FY 2013 budget recommends 11.77 FTEs for the Parks
Department. From staff conversations with Missoula, that city maintains 356 acres with a budget
of $1.3 million, or roughly $3651/acre. Bozeman spends approximately $2740/acre. This recent
example corresponds with the PROST study from 2007 which found that “The average park
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budget per resident for all peer communities is $47.07. Bozeman’s park budget per resident of
$37.90 lags significantly behind.”
Clearly, City Commissioners must consider future maintenance options. One choice could be to continue the current practice of allocating funds for maintenance annually, and these funds could expand as trails, parks or other lands were brought into the City system. The costs of
maintenance are well-known by staff (see details below) and funding could be appropriated
accurately on an annual basis to meet the increased need, factoring in differing costs for various
parks types, any maintenance partnerships, and other factors. The other option would be to conduct maintenance through one of the two bond options
mentioned above. As the memo noted, the Title 7, Chpt. 16, Part 41, MCA
(cultural/social/recreational facilities) option would require clarification of what’s eligible for
possible maintenance beyond athletic fields. The second option, the Montana Open Space Act (Title 76, Chpt. 6, MCA), would allow for maintenance of lands acquired “by the expenditure of the bond proceeds.” So any additional lands—whether parks, trails, creek corridors, or
recreation fields—could be maintained through the bond funding. The maintenance issue is
highlighted again at the end of the memo, and an approach to maintenance should be clarified by
Commissioners as part of the larger discussion. Maintenance Costs Summary:
Typical
Parkland Athletic Fields
Direct
Cost/Acre
Annual
Frequency
total
cost/acre/year Annual Frequency
total
cost/acre/year
Mowing $40 20 $800 40 $1,600
Aeration $52 0
- 2 $104
Fertilization $121 1.5 $182 3.5 $424
Herbicide $64 0.5 $32 2 $128
Overseeding $460 0
- 1 $460
Total
cost/acre/year $1,014 $2,716
Staff
hours/Park
#
Occurrences
Staff Hourly
Rate Total Cost/park
Garbage/Restroom
Mgmt 2.0 112 15 3360
Irrigation
Maintenance 60.0 1 15 900
This table is meant as an overall summary to compare costs. Garbage/restroom management is
daily for 16 weeks in the summer. Staff hours vary from 0.5 - 4 hours/park. Irrigation
maintenance varies for individual parks.
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Other Priorities
The City always will be facing competing priorities for funding. Investing now to protect our
quality of life will benefit our families, businesses, and future generations. Taking steps to
improve trails, parks, and outdoor recreation are long-standing priorities that can be accomplished today when we can stretch taxpayer dollars further, and engage in a number of partnerships. Parks and trails are part of our City’s infrastructure and transportation network,
and no other substantial, on-going funding mechanisms currently exist to expand parks and trails.
That said, the timing and budgetary situation also allows for the City to pursue this bond while still pursuing additional actions on other priorities in the coming years. The Municipal Courts and Police Facility, replacing Bogert Park outdoor pool, the results of the Recreation/Aquatics
Facility Feasibility Study, and the current Capital Improvements Program are all items that can
and must be addressed and prioritized by the City.
ACCOUNTABILITY AND METRICS The City should explore establishing a citizen’s advisory group—either as part of the Recreation
and Parks Advisory Board or as a new entity—made up of citizens with a variety of backgrounds
with expertise in financial and accounting issues, parks and trails, development, and other related
fields to perform proper oversight. That group, in collaboration with City Staff and under review of the City Commission, should develop a process that incorporates public hearings and transparent metrics by which projects would be measured and evaluated.
The ballot language itself will require that funds are to be used solely for acquiring and
improving parks, trails stream corridors, and natural areas and cannot be used for any other purpose. The language also could specify maintenance issues. In addition, the ballot language should create the oversight board, to which all City regulations would pertain such as open,
noticed meetings held to evaluate projects based on publicized criteria and metrics. The
oversight group would make recommendations to the Bozeman City Commission on all
expenditures, and the City Commission also would hold open, noticed meetings and votes before any final action could be taken. Also important, all revenues and expenditures will be subject to an annual public audit, report, and review.
QUESTIONS, BALLOT LANGUAGE, AND SUGGESTED MOTION Questions Should the Commission wish to proceed; the following discussion will direct the determination of whether the Commission desires to proceed under Title 7 (recreation/culture/social) or Title
76 (Open Lands Act) and also will influence the ballot language placed before voters.
1) The types of projects that will be funded with the proceeds of a bond sale. This would include:
o Real property purchases;
o Purchases of easements or other legal entitlements to use real property (e.g. a
lease such as exists on the Story Mill Spur Trail);
2) Should the real property purchased or the rights-of-way obtained be limited to those
within the City or will the City be authorized to purchase real property interests outside
of the City?
3) What types of improvements to the real property/rights-of-way purchased with bond
proceeds should the bond proceeds fund?
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4) Does the Commission want to fund improvements with bond proceeds to lands NOT
acquired with bond proceeds?
5) Will the Commission be interested in using bond proceeds for maintenance of existing
and/or property interests obtained with bond proceeds?
6) Will all acquired property interests purchased require public access?
7) The Commission may want to determine at this time the specific dollar amount of bonds
to be sold;
8) How does the Commission want to structure the administration of the trails/park bond
program?
a. Creation of an advisory board;
b. Role of the Commission in approving purchases/acquisitions (final decision at a
public hearing);
c. Metrics for purchases: how will the advisory group and the Commission evaluate
and prioritize proposals? Who is eligible to bring forward proposals? This could
be done AFTER the election if successful.
d. Independent annual audits;
e. City staff assigned/necessary to manage the program and lands acquired;
f. Current municipal code provisions on purchase of real property will apply – does
the Commission want to alter those existing requirements (2.06.860, BMC)?
Sec. 2.06.860. - Appraisal required for certain purchases of real property or conservation easements. Unless otherwise provided by law, the city may not purchase real property in an amount in
excess of $200,000.00 or a conservation easement using public
funds in an amount in excess of $40,000.00 unless the value of the
property or conservation easement has been previously estimated by a disinterested certified general real estate appraiser selected by the city manager.
9) Additional information the Commission requires to be provided by staff prior to or at the
hearing on the resolution authorizing the election on the sale of bonds;
10) Other issues:
a. Who is eligible to vote: the law states that “registered electors” are those eligible
to vote.
b. Can public bond proceeds be used to acquire interests in real property that would
be held by a qualifying nonprofit, e.g. GVLT?
c. Legal issue raised earlier in the City Attorney’s section of the memo concerning
the two bonding authorities.
Next Steps
Tentative Schedule:
• June 18th Commission action item directing staff to move forward (and retain
bond counsel);
• July 16th Resolution before the Commission; and
• Last meeting to approve: August 6th.
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Possible Ballot Language:
Shall the City Commission of Bozeman be authorized to issue and sell general
obligation bonds of the City up to [Ten Million and No/100Dollars
($10,000,000)/Fifteen Million and No/100 Dollars ($15,000,000)], for the purpose of any one or more of the following but no other reasons: protecting lands that preserve water quality in rivers, creeks and streams, preserving natural areas, creating and
improving trails, parks and recreation areas, and preserving Bozeman’s quality of life)
with all expenditures subject to yearly independent audits and based on the
recommendations of the Parks Advisory Board, which bonds shall bear interest at a rate to be determined by the City Commission, payable semiannually during a term not to exceed twenty (20) years.
The estimated annual tax upon the issuance of the full [Ten Million and No/100Dollars
($10,000,000)/Fifteen Million and No/100 Dollars ($15,000,000)] in bonds, assuming a 3.0% interest rate per annum on the bonds for 20 years and based on the current assessed value of property in the City that would be subject to taxation to pay the debt
service on the bonds, is estimated be $xx for a home with an assessed value of $100,000
and $yy for a home with an assessed value of $200,000.
Suggested Motion: I move to direct staff to work with bond counsel to draft a resolution for Commission approval
on July 16th placing the question of selling $____ worth of general obligation bonds before the
registered electors of the City of Bozeman at the November 6, 2012 election under the authority
of [insert “Title 7, MCA (recreation purposes” or Title 76, MCA (Open Space Act”)] for the purposes of the following [insert specific language here on the scope of use of the funds].
The scope language can, of course, be amended at the hearing on the resolution but City Staff
need guidance from the Commission to draft the resolution.
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