Study Session - AFN Debt Service Alternatives for the City
|Meeting Date:||May 11, 2006||Primary Staff Contact:||Lee Tuneberg|
|Contributing Departments:||Secondary Staff Contact:|
|Estimate Time:||60 Minutes|
At their May 2, 2006, Council asked for this subject to come back in a study session to provide more time to consider the information available.
Attached is the Council Communication from May 2nd that provided basic information on the history and some alternatives for paying the debt. At the meeting, Council accepted the concept of separating the debt service payments from AFN operations for two reasons. It will be quite some time before AFN operations can fully fund the full faith and credit annual debt service and connecting taxes or charges on customers as part of an available service whether the customer subscribes to the service from Ashland or a competitor is likely to be in violation of federal laws and result in law suits the city probably would not win.
Council asked for more information regarding some of the alternatives and updated information is provided. In order for Council to decide on the direction for paying debt service, at least in the short term of one or two years, the Budget Committee meeting scheduled for May 3rd was postponed to May 18th.
Attached is a table with examples of scenarios of a surcharge calculation using a percentage, a flat fee or a cap. As discussed at the Council meeting, a penny of property tax approximates $17,000 in revenue so a $.20 tax rate increase is about $340,000. A combination of revenue streams may be the best solution and should be the basis for our discussion. Staff may have more information to distribute at the meeting.
Long term direction for paying debt service such as any refinancing or determining other resources for paying the debt may need to be deferred while additional information is garnered from legal and financial advisors.
|Related City Policies:|
Ask staff to bring back additional information or an action item based upon Council discussion.
Council indicate what alternatives seem most acceptable and ask the appropriate action be presented May 16.
None. This is a study session.
Click on the PDF file below to view the following attachments:
• Council Communication Dated May 2, 2006 on AFN Debt Alternatives
• Updated Alternatives
• Utility Bill Surcharge calculation
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