The Garden City, Kan., Commission on Tuesday unanimously approved a charter ordinance that would give the city significantly more freedom in addressing general improvements and issuing general obligation bonds for certain projects.
The new charter ordinance would repeal a 1975 charter ordinance that until this week dictated that the city may borrow money and issue bonds for government projects without local voter approval at the ballot box, as long as the amount of issued bonds does not exceed $350,000 a year.
The new ordinance will be published twice over the next two weeks, after which the public will have 60 days to protest the decision with a petition, said City Finance Director Melinda Hitz. If a petition with as many signatures as at least 10 percent of the number of voters who voted in the last city election is filed during that period, the charter ordinance will be put up to a public vote of city residents later this year. If not, it will officially take effect.
A charter ordinance allows Kansas municipalities to adopt a local rule that differs from certain state statutes that may not apply to all cities. The act itself is a rare one; this is only the 31st charter ordinance the City of Garden City has ever approved.
Under the new ordinance, city projects are instead broken into two categories — utilities and transportation repairs and projects, and general governing projects regarding public bridges, parks, land and other facilities — with different bond limits.
The city commission will now have no limit when issuing bonds related to utilities and transportation, and up to $2.5 million without voter approval when issuing bonds for general governing projects.
The change comes after several years of major public utility infrastructure expenditures that required long-term financing, plus a large electrical project on the horizon, Hitz said. The projects are generally paid for with general obligation bonds or revenue bonds, the latter of which tends to be more expensive in the long run, she said.
For instance, an analysis shows the upcoming electrical project would be about $500,000 cheaper if paid through a general obligation bond vs. a revenue bond, Hitz said.
With no caps on bond issuance for utility projects, city commissioners can use the general obligation bond to fix broken water mains or sewer lines, which must be dealt with quickly, said City Manager Matt Allen.
For years, the city's bond counsel has used the 1975 charter ordinance to substantiate bond issuance to the Kansas Attorney General's Office, Hitz said. The new charter ordinance gives the city more opportunities to issue general obligation bonds for projects.
"Especially for utility projects with a growing city, you're going to have lots more projects come up other than this one, and being able to use that general obligation bond is so much easier and doesn't require near as much money," Hitz said.
To reach the new $2.5 million cap for general governing projects, city staff adjusted the original $350,000 for inflation, which is about $1.6 million, and then took into account the city's population growth and scope of public services, Allen said.
Hitz told the commission the change was in line with how other Kansas municipalities have ruled. The City of Wichita has no limits for bond issuances, while smaller cities tend to have limits, but not as stringent as Garden City's, she said.
The goal of the charter ordinance is to save money, Allen said, and "to have local elected officials have the authority to make the decisions they need to make to run the organization."
"But, there's still a protection there," Allen said. "If it's not utility related and it's just general government related, there's this checkpoint where you say 'Look, if you're going to get more aggressive than this, then we need to go to the voters and have them give us some affirmation that this is the right thing to do."
