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Harmony refinances Heritage Grove bonds


Fri, Aug 1st, 2008
Posted in Government

HARMONY - Mike Bubany of David Drown Associates was at the Harmony City Council meeting on July 29 to discuss some options the city has regarding refinancing for Heritage Grove.

In 2001, the EDA (Economic Development Authority) issued bonds for 2.5 million dollars for Heritage Grove. According to Bubany, the bonds are up on December 1 of this year, at which time the EDA can pay off the loan or refinance for a lower interest rate. The two options that Bubany presented were to go with a General Obligation Bond and do competitive bidding, or else go with a program from the Minnesota Rural Water Association.

The MN Rural Water Association has a program which pools several communities together to sell bonds at the same time. Bubany explained that having multiple communities together like that diversifies the risks, and there is no cross-liability. That means if one community fails to pay their loan, Harmony will not pay any consequences. Another benefit of the program is that the MN Rural Water Association will give the city of Harmony a rating, which it does not currently have. The rating will allow the city to get lower interest rates. The council approved going ahead with the pool program.

Bubany gave the council a projection of payments and a graph showing how much money would be saved with the refinancing. The EDA had approved the resolution to sell the bonds with a cap of 4.68 percent or lower. If the interest rates fall at the cap or below, the EDA is permitted to sign the agreement. The rate is then fixed for the life of the loan.

Bubany mentioned that interest rates have been going up in recent months and he didn't believe that they would be any lower next year. There have been many other communities in the area that have gone with the pooling program for capital improvement loans.

Council member Sherry Hines asked Bubany what would happen if the interest rate was too high and everything fell through. Bubany answered that there are other options, and the EDA can do any kind of refinancing after December 1.

Parking Lot and Community Center Bids

City Administrator Jerome Illg presented the council with the four bids he had received for the Community Center parking lot project. The council accepted the lowest bid of $127,874.54 from Haugstad Construction Company, Inc. Illg mentioned that the price of bituminous has risen drastically in recent months and has driven the cost of the project higher than anticipated. The original engineer's estimate, which was done in the spring, was for $115,530. Illg said that prices probably won't be any better in the spring if they decide to wait until then. He also mentioned that the cost of using concrete instead of paving the parking lot would be a lot higher. The project should start at the beginning of September.

Illg said he is still waiting for approval from the USDA (United States Department of Agriculture) for financing on the Community Center projects. They have received some bids for the project, but he is waiting for the final approval, which he hopes will be in the next 7-10 days, before opening them. When Mayor Dave Kingsley asked about responses from contractors about the delay, Illg explained they all knew that it was a possibility, and have all been informed. He said if the approval arrives before the next council meeting on August 12, the council should get together and approve the bids so the project can get underway.

Fourth of July

Ralph Beastrom from the Harmony Area Chamber of Commerce spoke about the Fourth of July festivities and thanked the council, the workers and office staff for all of their help and support. He said the weekend was successful and everything went very smoothly with very few problems. There were a few new things this year for generating revenues, including buttons that brought in a little over a thousand dollars. Even so, Beastrom said they need to look at other ways to bring in money, as they didn't make quite enough this year to cover expenses. The council thanked Beastrom for all of his and the Chamber's hard work.

Other Business

The EDA approved two purchase agreements for the sale of the mobile home lots and received the council's approval. The owners have up to one year to improve the property to their intended use.

Jeff O'Connor said they have figured out what is needed for a street leading to the new Antique Mall that is going up in the Industrial Park. He said they need to scrape off the organic and lay down about six loads of rock to meet the elevation and cover the manhole. He estimated the project to be around $1,500. City Employee Chris Johnson is going to ask a local man to do the work.

Bill Hanlon requested the city put in a new fire hydrant on the southwest corner of the Greenfield Ag building where an addition is being put up. He would like it connected to a large water main. The city is going to look into the costs.

The council approved the list of election judges for the primary and general elections.

The council also approved a snow removal bid from Knife River, which was the only bid received and the company the city currently uses. Illg said the fuel costs are driving the prices up.

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