At the September 8 meeting of the Preston City Council Mike Bubany, David Drown Associates, reviewed two options available to the city to go forward with the refinancing of two 2014 bonds, which are callable in February 2022.
The 2014 bonds were for the street project and the north industrial park. The bonds will become eligible for refinancing in November. Lower interest rates could allow the city to realize a savings of nearly $180,000 over the life of the bonds.
Bubany discussed two options. The city could update its credit rating and go to a public sale, which would take time and incur some costs which would not be refundable if the city decided not to go forward because of rate increases in the interim. The other option is a direct bank placement which would have lower issuance costs and have less risk, but likely less savings. The public sale option which will incur more risk could result in a 1.1% interest rate (if rates don’t increase during this process) and the direct bank placement which has less risk is more likely to result in a 1.3% interest rate.
Bubany emphasized that there is an uncertainty with a rated sale that will take time. It is about managing risk; there is value in removing the uncertainty. He recommended the direct bank placement. He noted the refinancing will have a significant impact on the city’s year to year budget for the remaining life of the bonds.
The council directed Bubany to submit an application to Minnesota Rural Water Association (MRWA) to refinance the bonds as recommended.
New Fire Pumper
Fire Chief Ramon Hernandez explained that the department’s pumper is 31 years old. The National Fire Protection Association recommends that an apparatus that was manufactured over 25 years ago should be replaced.
Hernandez recommended the purchase of a 2022 pumper that has the capacity to hold 2,500 gallons of water. The pumper which has seating for five will cost about $600,000 fully equipped. About $100,000 of the cost will come from charitable gambling receipts, $250,000 from the township fund and $250,000 from the city fund.
Hernandez said if the cost is paid up front 3% can be subtracted off the price of the pumper. He noted the contract pricing available until the end of October will likely go up 10-20% after that period. The purchase of the new fire pumper was approved. The pumper will take about a year to build.
The discussion draft of the 2022 budget was discussed. It currently showed a 4.47% levy increase. Every $10,300 represents about 1% of levy increase. Sheila Marzolf explained that health insurance increases estimated for budgeting purposes will be about half what was estimated. Salaries are scheduled to increase 2.5%.
The draft budget includes $13,851 for the National Trout Center. In May of this year the council had suspended payments to the NTC. The council will study the draft budget over the next couple of weeks. The preliminary levy will need to be approved at the September 22 meeting. When the final budget is approved in December it may be reduced, but not increased.
Other Business in Brief
•Aaren Mathison, representing the Fillmore County Fair Board, said the board appreciated what the city and maintenance department has done over the years for the fair. He noted there is increased capacity for camping. The board keeps in contact with the busing company which had been a valuable asset before COVID.
Councilman Robert Maust stated he read in a historical record that the city of Preston donated the land for the fair board back in the 1800s.
•The fourth pay request from Alcon Excavating, Inc. in the amount of $380,248.85 was approved for the 2021 Street and Utility Projects.
•The Johnston stormwater easement was again discussed. City attorney Dwight Luhmann explained that Johnston has three issues with granting the easement. The location of the easement; he wanted it moved closer to the overhead power line which can be done. The utility easement limited to stormwater which can be done. The third was an allowance for a solar array.
In 2019 Johnston had asked to be allowed to install a 40 kW solar array. City ordinance only allows roof solar systems in a residential area. City Administrator Joe Hoffman said the council could revisit that decision. In order to allow the array Johnston proposed the city would have to change the city’s ordinance or Johnston would have to apply to rezone his property.
Mayor Kurt Reicks said he did not want to change the ordinance. Luhmann was directed to again contact Johnston or his attorney about the possibility of applying for a rezoning of his property to allow a large solar collector. This would require a public hearing. Johnston would need to get his property rezoned and get a conditional use permit for the solar system.
City Engineer Brett Grabau said the installation of the stormwater line will not be done until next spring.
•Trout City Brewing is being sold to Craig and Vickie Hildestad. Marzolf said the police chief was confident enough on the background check for the couple who currently live in Florida to issue a liquor license. The final approval comes from the state. The council approved the liquor license application from Hildestad.
•A request from Marchel Comstock at 412 Fillmore St. for a new driveway access along Park Lane was approved.
•Approval was given to donate an obsolete EMS cot to Freeborn County.
The next city council meeting will be held on Wednesday, September 22.