Council approves bond, hears updates on Twenty-14, industrial park projects
Wednesday, June 04, 2014 3:22 AM
Consultant Mike Bubany of David Drown Associates, Inc., approached the Preston City Council during the June 2 meeting to discuss the Twenty-14 project bonding. Mayor Kurt Reicks and councilmember David Harrison were absent.
"In Minnesota when cities need money for a project or they need to borrow money, they can't just go to a bank to get a loan, so you have to structure the debt as a bond issue. This is different than a loan in that with a bond what you are doing is promising to repay and pledging certain revenues," Bubany began, calling the revenues Preston is able to pledge quite powerful.
He recommended the bond be structured as a general obligation improvement bond, which means that if all else fails, the council will levy taxes to make the bond payments.
Bubany noted that, in Minnesota, no city has ever defaulted on a general obligation bond.
The bond will cover construction costs, engineering and a 10 percent contingency, along with the corresponding fees for a total amount of $4,150,000 with a 15-year term.
Annual tax levies are estimated at approximately $264,000 beginning with taxes payable in 2015, though the levies may be reduced or eliminated if the city is able to find other sources of revenue. This will be a topic the council will continue to explore later this year.
If there is money left after the construction project, the city will be allowed to move the monies to the debt service fund in order to buy down levies.
The council voted to approve a resolution to authorize the bond.
Twenty-14 project update
After approving the bond, the council learned the importance of the contingency portion of the bond, as it received an update on the Twenty-14 project from public works director Jim Bakken.
The project began last week and a few issues have already reared up.
The first issue deals with the set of steps located at the corner of Preston Street and St. Paul Street.
The north/south steps need to be replaced while the east/west steps are in good condition at the moment.
Bakken gave the council the option to either replace the north/south steps or get rid of them all together.
Citing a safety issue with the complete removal of the steps, the council agreed to replace the damaged steps at the approximate cost of $1,000.
The next issue entails the carriage walks, which are the walkways connecting the curbs to the sidewalks.
"The engineers are wondering if we want to have these replaced or not. When the project was bid it was bid to replace them all, but there are several issues. There are lots of elevation problems where they could not just pour back a new sidewalk. They would have to put in at least a couple of steps, which is more expensive," Bakken reported.
He noted that some residences and businesses have the walks while other do not.
The council concluded the replacements should be taken on a case-by-case basis, so the city staff will be contacting affected homeowners and business owners to see if they would like to have the sloped walkways replaced.
The final issue involves the replacement of the water main on the section between Houston Street and St. Paul.
Though the main was not scheduled to be replaced, as the work progressed on the project they became aware that the main does not stay on the north side of the street as was previously thought. Instead it gradually slopes to the south.
Bakken explained the entire cast iron main needs to be replaced now that it has been disturbed because it is much more vulnerable to breaks.
"Once that street is done and we get a water main break there I think I'd be sick if we had to dig it up," he said.
The cost is estimated to be around $21,000.
"You get to a position where you have to do what you have to do," Councilmember David Collett said of the issues.
The council agreed, as they approved the replacement of the main.
Find updates throughout the entirety of the project on the city's website http://www.prestonmn.org/ or follow them on twitter, @Twenty14Project.
Industrial park update
City administrator Joe Hoffman announced the city has received the DEED (Department of Employment and Economic Development) grant, which is greatly needed to help offset the cost of the industrial park. The grant, totaling just under $500,000, will pay up to 50 percent of the electric, sewer, water and street costs.
"It is certainly great news and we want to acknowledge Cathy Enerson (economic development director) and the EDA for all the work they put into this," Hoffman said.
Hoffman then reported he, councilmember Robert Maust, and city engineer Brett Grabau had met with Jerald Wingert about possibly purchasing land for the industrial park's water storage site.
"We had a very good meeting and we are very optimistic that we will be able to locate a pond on the property," he added.
With this announcement, the council agreed to form a land committee, consisting of Reicks, Maust, Hoffman and city attorney Dwight Luhmann, to negotiate on behalf of the council.
The council also moved to have a feasibility study and survey completed for the proposed pond site on the Wingert property.
"I think we're making great progress on this thing," Maust said. "A lot of things are happening pretty fast."
Hoffman agreed, saying, "We are in a much better position than we were a week ago."
The vacated position of Preston Tourism Director, left open after Kathy Dahl resigned, has been filled as the council approved hiring Sarah Wangen.
The tourism committee, consisting of Holly Zuck, Hoffman and Maust, considered three final candidates last week before bringing their recommendation before the council.
Wangen, who is the current president of the Preston Area Chamber of Commerce, said, "I'm excited for the position and to see what I can do for Preston, so thank you."
The position is set at 30 hours from May through October and 15 hours from November to April.
Wangen will begin the position immediately.
"Good luck in your new adventure," Collett told her.
The next council meeting will be held on June 16 at 7 p.m.