Mike Bubany, David Drown Associates, Inc., explained the terms of a bond sale for the purchase of the property at the city council’s November 28 meeting.
During the public hearing Bubany recommended a bond amount of $750,000. The issuance of the General Obligation Bond is for the purpose of providing additional space for the Public Works Department. The bond amount includes funding for the purchase of the property, building improvements, and issuance costs.
Bubany recommended a bank placement of the bonds to allow for flexible prepayment terms. Because of the taxable nature of the bonds, the length of the deal, and the need for flexible payment terms, Bubany said the city will receive a better deal through a placement agent, processed through Minnesota Rural Water Association’s MIDI loan program. An offer from Bremer Bank, St. Paul, at a favorable interest rate of 6%, was provided. The city will be able to sell the property if a plan for building a Public Works facility becomes a reality. The bond can’t be tax exempt because of the plan to one day sell the property for use by a private entity.
The bond can be called as early as 2026 with a prepayment penalty.
Gary Ruskell said he felt the plan was “a poor band-aid for the city’s needs.” He expressed his concern, if a private entity wants the property in five years, the city may set up a TIF district or essentially give the property to a developer. He noted, “I would like to see something more permanent rather than a temporary patch.” He suggested a new shop could be built along Enterprise Dr. for Public Works.
Bubany said it would be up to the city what the property could be sold for; ideally it would be sold for the outstanding debt. Councilor Josh Broadwater maintained this is a temporary solution, adding I can’t see where I would vote to give away the property or provide a large discount. Councilor Mike Urban noted much of what Ruskell brought up was discussed in committee. Urban maintained this purchase will lock up a portion of downtown that can be used in multi-faceted ways in the future, saying, “We put a lot of thought process into this decision.”
In order to close the sale before the end of the year the city council adopted two resolutions. The first gives preliminary approval for the issuance of bonds up to $750,000 and adopts the Capital Improvement Plan 2022-2026. The second is the final authority for the issuance and sale of $750,000 taxable general obligation capital improvement plan bonds for the acquisition of the property. The passage of this on this day is to allow a sale before the end of 2022.
Starting on November 29 there is a 30-day period which will allow residents the opportunity to submit a petition to force a referendum; this requires at least 5% of voters to sign on. Bubany noted if at least 5% of the voters petition for a referendum by December 29, the city will be able to back out.
Other business in brief
•A resolution to establish the position of city administrator and to provide job descriptions and pay equity classifications for the positions of city administrator and city clerk was approved.
•The first consideration of the 2023 Fee Ordinance was approved.
•City Engineer Craig Britton explained he was looking for city council input regarding Shady Oak Park (1.3 acres). A street project is being planned for 2023 improvements for Grand St. SE, Hawley St. SE, and Prospect Street. Shady Oak Park is accessible from both Hawley and Prospect Streets. He noted several questions the committee is considering. Is the park the right location for camping? Should it remain as is? If the camp sites are retained, should they be regraded to provide level camp sites? Should services be extended into the park to provide future residential sites? Also, there were questions about street width and the addition of sidewalks in the area?
Urban said if the park stays the way it is, it needs services. Mayor Russ Smith felt the camping area is a nice amenity for the city, adding campers do pay fees. Urban said the cost will be minimal if we leave it basically as is. Brian Burkholder said the six current sites need to be regraded. Britton suggested adding services and regrading could cost about $20,000. Councilor Pam Bluhm stated she would like to see it maintained as a park. Smith added sidewalks have not been part of the plan.
•A resolution was adopted accepting a $10,000 donation from the Fire Fighters Activities Association to be added to the fire truck fund.
•A resolution was adopted to approve an agreement between the DNR state of Minnesota and the city to authorize the city clerk to sign and submit the 2022-2024 OHV Trails Assistance Program maintenance project agreement.
•Urban offered thoughts and prayers for the families displaced by the recent fire in the apartment complex.
The city council will meet next on December 12.