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Preston City Council Report: Bonding bid for County 17 accepted


Fri, Aug 8th, 2003
Posted in Features

Another busy agenda was tackled by the city council of Preston. Confusion, occasional disorder and conflicting personalities fueled a long meeting.

Mike Bubany of David Drown & Associates presented the bids for the County 17 bonding. He noted that interest rates have gone up since a month ago, but that they are still lower than a year ago. This interest rate hike will cause utility costs to be slightly higher than projected. The lowest bid rate of 4.5936% was by United Banker's Bank out of the Twin Cities. The council accepted the bid, locking in on the bid rate.

Recreational Center

Financing Options Explored

Bubany discussed the options for the proposed Recreational Facility. The City would have to come up with about $1,500,000. According to Bubany, the traditional way of market referendum bonds would mean home owners would be taxed on the market value of their home, shifting the burden from business to residential.

A second option, he noted was the possibility of a lease-purchase situation where the EDA would rent the facility to the City. This would be risky to investors, since the City could back out, causing higher interest rates.

Thirdly, general obligation bonds would require a 20% assessment and would be hard to defend, as they need to show a like increase in property values.

Bubany said that Preston would need to increase it's total revenue intake for the next fifteen years in the amount of $150,000 or more per year. Bubany noted, "This is a large project for a city the size of Preston.

Bonita Underbakke voiced her opinion about the accumulating burden for citizens with increased utility expenses, street assessments, etc. She continued, “It may be sacrilege, but maybe Preston should learn to live without any swimming pool at all. All (this money) is coming out of the same few pockets."

It was noted that the Silver Lake Pool in Rochester is closing because of cut-backs and is not scheduled to reopen. Ben Love said that he has been a resident of Preston for 30 years and he believes the recreation facility would be an 'economic disaster.'

Bubany suggested, "If there is a disparity of opinion. . .maybe a referendum is the way to go." Mike Sveen said that there is never a good time to spend the tax payers money, but this is an investment in the future. Mayor Dave Pechulis noted that the facility is expected to operate at a deficit as does the present pool and that it may require about $185,000 per year in revenue. Council member Heath Mensink noted that at the last council meeting it was decided to give the go ahead to Crescendo Consulting to see if they could raise $3,000,000. Mensink suggested that it will cost the City nearly $1,500,000 to replace the existing pool and that investing in the recreational center was a better option.

Alcohol Policy for Fire Department

Mayor Pechulis has over a period of months urged the Fire Department to enact an Alcohol Policy to protect the City from liability problems. The Mayor argues that the City is open to a law suit in the event of an accident involving alcohol which would then 'cost the city tens of millions of dollars or hundreds of dollars a year in additional property taxes.' Without an alcohol policy, the sole liability would be the City's. Pechulis suggests that the city's insurance provider would not cover the city nor would the League of Minnesota Cities defend it in such a case. He said that there are four policies to choose from. Pechulis emphasized that the policy should require, 'if you consumed alcohol in the last four hours. . .don't take an emergency call.'

Mensink, who is a member of the Fire Department, explained that the department is in the process of assembling a handbook which will include a policy. Pechulis argued that a policy is needed now.

Travel Policy

Pechulis offered a seven page detailed travel policy. Council member Mike Gartner questioned the appropriateness of the policy noting that it had been drafted for a larger town. The Mayor felt the policy offered by Gartner was too subjective. Gartner's policy would require receipts be submitted to the council, after which it would approve or deny payment on each expense. Council member Mike McGarvey suggested that it would 'take a lot of time to take (receipts) line by line.' Gartner's policy was approved.

State Investigation

Mayor Pechulis said that after being contacted by an unnamed resident of the city, he contacted the State Auditor’s office and requested an investigation. Pechulis refused to answer questions detailing the matter of the investigation saying it was confidential. Pechulis said that when the investigation is completed, it will be made public. Most of the other council members were visibly and audibly upset about being kept in the dark about a state investigation.Council member Jerry Scheevel said that “we will clear up this matter in a closed meeting.” Gartner noted that in his opinion this is wrong as ‘nothing is for free’. He expects the state’s investigation will cost the city money.

Mill Street Vacated

A resolution was passed to vacate a portion of Mill Street. A smiling Greg Johnson was finally granted his request and was applauded by citizens as he returned to his seat. He plans to build a miniature golf course on his property and that portion of Mill Street that has been vacated.

Kansas Street Improvement

A public hearing is scheduled for September 2, 2003.

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