At the September 27 council meeting, financial consultant Mike Bubany, of David Drown & Associates, brought forth details of a request by Winona Health to utilize conduit revenue bonds for Health Care Facilities Revenue Refunding Notes. At the time, he explained how cities have the opportunity to assist private-sector entities if the project is deemed to be in the public interest. Cities are allotted $10 million annually in bank-qualified debt and conduit issuances are credited against this amount.
“The issuance of conduit debt on behalf of a third party is typically for entities looking to take advantage of the City’s tax-exempt status. This is a tool the Federal and State governments afford public entities to help finance projects both within and outside city limits,” states the new Rushford policy.
At the time it was discussed initially, the city had no policy in place for charging administrative fees for the process, but suggested one be formulated to avoid “back and forth” fee negotiations. $40,000, a figure which fell between a quarter and half per point, was recommended.
City Clerk/Treasurer Kathy Zacher put together a policy for council review. “I researched and dug out policies from about six different cities; some bigger, some small. The dollar amounts on there are what Mike Bubany suggested,” she stated. “We should review the policy annually. It’s not like we do this often.”
In the end, the policy states, “A bond administration fee of the greater of $10,000 or .5% of the principal amount of the refunding bonds is due at the time of closing, subject to a maximum fee of $40,000.”
It was also noted by Zacher and council members that the fee maximum may change with time, particularly if the situation is a first-time bond, not a refinance. “They can use our capability for bonding and pay a little more for that,” added Zacher. “This gives guidance and if happens in the future, don’t have to negotiate. It’s good for us.”
The city has used this process twice previously for Good Shepherd Lutheran Services and for Winona Health’s initial bond. The public hearing on the new Winona Health request is October 12, at 6:30 p.m., at city hall.
The council also discussed a new application for an Economic Development Authority/Revolving Loan Fund Residential Rehabilitation Loan for a North Burr Oak Street property. “This is a deferred loan to homeowners in the City who meet income guidelines, for general repairs and improvements to their residence. The loans are 2% simple interest for ten years, with no payments due until the home is sold or is not the borrower’s principal place of residence,” stated the agenda summary.
While the application met all the guidelines, there was some discussion about the funding being used for a newer home. Of the 14 applications that have come in, only six (not including the new applicant) had met approval. It’s been used for new windows and a fireplace, sewer line upgrade, a new roof and gutters, bathroom and water line repairs, heating, demolition and other repairs, and to finish a basement. The current application is for a concrete driveway and deck. “I thought it was for dilapidated homes,” said Councilor Leigh Volkmann.
“It’s interesting since it’s only a year old,” said Mayor Terri Benson.
“It depends on who applies for it. We’ve advertised it quite a bit, but either people just don’t or maybe they don’t need things done,” said Zacher, who further detailed how the city had to give back $100,000 in Small Cities Development Grants in 2012 because no one came forward to seek the funding.
“There may be an intimidation factor to go in and ask for a loan. It could be a stigma,” added Benson. “This was a gap one if they make too much money for a grant program and can’t get a bank loan.”
“There’s been a lot of free money this year,” added Councilor Andrew Linder.
“I think they saw an opportunity to do some creative financing,” stated Councilor Jim O’Donnell.
Volkmann suggested the city go back and revisit the rehab loans and guidelines. $300,000 was set aside for the program. To date, $125,695 has been loaned out. The council ultimately approved the application as it met all program criteria.
In other news, the council unanimously approved setting the maximum proposed tax levy at $1,017,000 for 2022. This is the same amount as in 2020. The final levy will be adopted on December 28.
During Reports and Updates, it was noted the city had a successful turnout for the September 25 Taste of the Trail event with more than 225 bicyclists attending, many staying locally. “Some of them came back and said they loved Rushford; said it was the best part of along the trail,” enthused Councilor Sally Ryman. “We get a lot of comments about how clean and nice the town is.”
An issue with an electrical box, specifically a high voltage splice box, is on track to be addressed. According to Zacher, when the new school was built, the contractor didn’t coordinate with the landowner, Mitch Bublitz. The pins for placement were moved during construction and the box was ultimately put in the wrong location. The box will be moved, but power to the school needs to be shut down to do so. Currently, the city is looking at MEA weekend, but the city will need to coordinate with Rushford Festivities due to a craft fair that will be held at that time.
The next regularly scheduled council meeting is Tuesday, October 12, at 6:30 p.m., at city hall. Please note the day change to accommodate the federal holiday on October 11. The meeting is open to the public.
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