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Preston to proceed with planning for 2014 street project

Fri, Feb 8th, 2013
Posted in Preston Government

City Administer Joe Hoffman reviewed at the council’s February 5 meeting estimated levy increases that would be necessary over a twenty year period to finance the Twenty-14 street project.

Hoffman explained one scenario for the street improvements which are estimated to cost $4 million. This plan would have the work being done in two parts, half in 2014 and half in 2018. Fifty percent of the cost of the work would be assessed. Each $2 million bond would be paid off over 15 years. The city’s existing bond debt payments will end in 2016 to 2019.

It was estimated for this scenario that the interest rate on the bonds would be 3.25 percent. Councilman Robert Maust suggested that it may be cost effective to take advantage of the unusually low interest rates that are available now. Maust maintained money is cheap right now. He questioned whether it would be more economical because of current low interest rates to do the work in one year rather than in two parts.

Hoffman said there are a lot of variables and a lot could change. Certain citizens could get a triple ‘whammy’ as they would have an increase in property taxes, assessments, and utility rate increases. Utility costs were not included in Hoffman’s numbers, but some improvements that would be done concurrent with the street work would likely cause an increase in utility rates.

Hoffman added that he expected they will get better life out of the streets and utilities as they intend to be more vigilant with maintenance to make them last longer.

The council unanimously approved a motion to have the staff with the help of the city engineer prioritize the streets and then prepare a proposed project and budget.

Small Cities Grant

Gerry Krage, SEMCAC Community Development Director, during a public hearing reviewed the Small Cities Development Program (SCDP) as related to the proposed project in Preston including Vesterheim apartments and 15 owner occupied rehabs. The owner occupied home owners that qualify can get a maximum of $22,000 in a deferred loan at 0 percent interest for seven years. If the owner stays in the home for the seven years, the loan becomes a grant.

Bluff Country HRA is administering the funds. The total funding from the Minnesota Department of Employment and Economic Development (DEED) is $371,250 for the owner occupied homes and $100,000 for Vesterheim. The total project including other money sources could bring $1,453,940 into Preston. Krage added where possible they will try to hire local contractors.

Preston sent out 460 surveys to home owners and 70 of those were returned. Krage said there has not been a problem getting interest in Preston for this project. He suggested it helps to waive permit fees as it looks better if everybody is buying into the project. There were no comments from the public.

A resolution was adopted which makes the city of Preston the legal sponsor in the application for funding from DEED. A motion to issue building permits at no cost for this project was approved.

Other Business In Brief

•Hoffman noted that the city staff has been working with the state’s project engineer (Stantec) which is doing the preliminary design for the proposed Veterans Cemetery. A small portion of the cemetery is within the city limits of Preston. The main buildings may actually straddle the city limits. The city is looking at the possibility of providing utilities for the project including water, sewer, and electricity. Hoffman said they normally annex property where they provide utilities, but not in this case.

•The Preston EDA recommended that the interest rate for the revolving loans of its revolving loan fund be lowered from three percent in 2012 to 2.5 percent in 2013 for new loans. The change was approved.

•A donation of $100 was approved to the Post-Prom Committee.

•The city will put a small ad ($40) in the Preston Honor Roll of Business advertisement in the Republican Leader.

•Approval was given as recommended by the EDA to loan $15,000 from its revolving loan fund for interior and exterior improvements at 613 Spring Avenue (the former One-Stop Building). Also, $12,000 remains from downtown rehab funds. Mike and Sylvia Steien have requested assistance with the rehabilitation of the building. Approval was given to add this to the “target area” to allow it to qualify for the funds.

•2013 Housing Incentives were approved. To get more information go to and click on Economic Development and guidelines and application. Incentives for 2012 cost the city $1,200. The maximum incentives from the city available for 2013 total $4,800.

•The next city council meeting will be on Tuesday, February 19.

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