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Preston 2007 street and utility improvments go forward


Fri, Mar 23rd, 2007
Posted in Government

PRESTON - The Preston City Council voted unanimously to go ahead with the order for plans and specifications for the 2007 street and utility improvements at their March 19 meeting. Because of the tight time frame the council had no choice but to take the next step or loose another year to get needed work done.

Mayor Kurt Reicks insisted that the work "needs to be done" if we want to get streets in order and maintained. Brett Grabau with Bonestroo and Associates suggested that part of the project could be bid as an alternate in case bids came in too high. He warned that if the project size were to be reduced by not doing one of the four proposed areas that it would result in the average price of bituminous being raised for the reduced project because of smaller volume.

Financing

Mike Bubany of David Drown and Associates detailed financing options. He explained three ways of selling bonds; a) a competitive sale for large bonds where it is put out for bid usually getting the best deal, b)a negotiated sale with a bank usually best for short term small loans, and c) a pooled debt program through the Minnesota Rural Water Association. The third option is relatively new and would allow for a small unrated city (by Moody's or Standard and Poor's) like Preston to get rated with a large group of participating cities in a joint powers program allowing it to qualify for a lower interest rate. Bubany suggested that the program allows a small city to "enjoy interest savings from a rated bond without having to be rated yourself." He answered the concern about liability. A city in the program would not be responsible for a default of another participating city. Bubany noted that this was being brought up as an option and would probably not work with the time table of the 2007 project. David Joerg asked what kind of rating it could get through the program. Bubany answered that it would get AA-.

Mr. Bubany also suggested that the city call its old 1998 bond and roll it into the new bond to save some money. He encouraged the city to take the loan for the shortest term possible, probably ten years.

City Administrator Joe Hoffman explained that the project costs for part of Main Street, Center Street, the Valley Street area, and the Corn Cob Acre area will be broken up between water, sewer, storm, and street portions. Some cash will be spent down from the storm water utility fund. Dollars recently being budgeted to pay off the 1996 bond will be redirected to the new bond. Additional funds will come from assessments. The levy will need to be increased by 1.3% to make up the difference. Hoffman stated that the figures were preliminary. No action was taken by the council.

Assessment Policy

Councilman Heath Mensink spoke in favor of the new proposed policy as it would update the old unworkable policy with one that is more equitable. Robert Sauer stressed the importance of everyone knowing they will get the same deal. Joe Hoffman said that, both in 2005 and for the current project, he has heard concerns from property owners that they will be the last to be assessed. He hoped that the new policy would calm these kind of fears.

City attorney Dwight Luhmann advised that the council should approve or disapprove the policy as a guideline and not as an ordinance. Hoffman said that the current policy was an ordinance and should be repealed. Hoffman suggested that he work with Mr. Luhmann on a resolution to put the new policy in place and to repeal the old policy.

Vacation of Farmers Street

As part of the development agreement with Sorensen Development, Inc. for the Family Dollar Project, the city agreed to "vacate the 33' by 183' section of Farmers Street while retaining a 15' easement along the south line of the vacated property." Joe Hoffman noted that there has been a public hearing. A resolution was passed to vacate part of the street.

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