At the March 28 meeting, the Rushford City Council received an update from financial consultant Mike Bubany, of David Drown Associates, regarding the bond for the rapidly upcoming Highway 30 project. The street and utility project is being coordinated by the Minnesota Department of Transportation (MnDOT) and is set to kick off as early as late April. Being a state-run project, the city was required to sign a cooperative construction agreement, waiting until bids were let and the city share verified, in order to size the bond correctly. The city also had to agree to make payment on its portion of the cost just 30 days after being notified of its final share and before the project commences. This time crunch required the bond process to be set in motion and council-approved earlier than most projects.
Rather than a typical bond placement, the city utilized the ability to use an exemption for municipalities to seek out their own loans through a Minnesota Rural Water loan program. Typically, bonds would require a broker and can have limitations on providers. City Clerk Kathy Zacher did the legwork of searching and was able to secure a partnered deal with F&M Community Bank, Rushford State Bank, and First Bank of Zumbrota for a non-rated, $2.87 million bond, at 2.3% interest, for a 10-year term.
“We keep finding ourselves in weird markets. Coming off of COVID and with things happening overseas and the feds raising rates, everybody’s nervous about rates of inflation,” said Bubany.
According to Zacher, MnDOT’s winning bid came in a million over their engineer’s estimate. While it didn’t affect the city’s portion too greatly, it was eye opening to see where the market’s heading. It was also noted that in a comparison analysis, the city did better with the private banks than it would have with a rated public sale.
“We were projecting $30,000 or better in savings over the life of the deal. These banks are going to buy these bonds and hold them, not piece them up and sell them,” added Bubany. “I’m almost embarrassed to say this, but we’ve got several locked in and coming up and yeah, COVID kind of really did a whammy. Rates are going to continue to go up and we’re going to have to consider the time to get ratings.”
The next step in the project is determining assessments to affected property owners and the holding of several resident meetings and a public hearing. The dates of these have not yet been set.
The bond also includes $400,000 for the city water tower project, which will include sandblasting and painting of the entire structure. It was noted the total project cost isn’t fully known, but the amount could cover the totality of it. The tower hasn’t been painted in 22 years, other than a somewhat recent touchup to the stem, and new coding laws are requiring specific products be used. The cost to issue the bond with the additional funds was relatively the same and it provided the city needed flexibility with the funding for the water tower project.
In other news, Public Works Director Roger Knutson provided a detailed summary of work completed in 2021 and goals for the department for 2022. The projects were all those that were above and beyond the normal, daily scope of their work. They included items such as watermain breaks and repairs, street patching and blacktopping, electrical projects, storm drain work, removals and upgrades at the wastewater treatment plant, well houses, and municipal pool, improvements to department equipment, continuing work at the municipal airport and ongoing work improving city parks and downtown beautification.
Big goals for this year include moving all lighting on the Highway 30 corridor underground during the reconstruction project, installation of an electric car charging station, and substation circuit breaker replacement. An electric rebuild project at the Historic Depot and surrounding area and construction of the new canoe launch east of Highway 43 will also happen this summer. At Creekside Park, the tennis court fence will be taken down and the blacktop area resurfaced for both tennis and pickleball, the basketball court will be updated, and playground repairs are planned. Several locations are also on the docket for street repair/blacktopping or alleyway work.
The council thanked Knuston for the work and he quickly noted, “It’s not me, it’s the boys,” noting the good work of the whole department.
The city has received an update from the Federal Aviation Administration (FAA) regarding a funding gap for the proposed hangar project. The previous hangar, one of two, was lost in a fire in 2019. Without a replacement, the city could lose its classification with the FAA which would equate to a loss of sizable annual funding.
The letter indicates the city will be able to use Non-Priority Entitlement Block Grant funding to help cover the cost of the five-unit hangar replacement. In addition, Bipartisan Infrastructure Law funding can also potentially be utilized to cover the shortfall. The FAA has also agreed to issue the city a one-time hardship waiver allowing the airport to continue receiving funding until 2025 and allowing two additional years to rebuild the airport to the level required to maintain its classification.
“That was good news,” said Councilor Sally Ryman. Bids for the project were good for 90 days, so the city should meet the timeline while securing the additional funding. “We’re coming into the home stretch,” noted Zacher.
Changes to the Economic Development Authority’s Home Renovation Loan Program were also approved by the council. The new wording makes the program parallel to things the city has already been requiring for years, such as allowing homeowners to sign off as their own general contractors, but all permitting and inspections are still required. The changes also make reference to the age of the home. “It needs to be either ten years old or in such an obvious state of disrepair instead of adding on and things that weren’t renovations,” said Zacher.
The next regularly scheduled council meeting is Monday, April 11, at 6:30 p.m., at city hall. The public is encouraged to attend.