The Preston City Council met in special session on Monday, March 31, to discuss the resolution for annexing 8.01 acres belonging to Preston Dairy and Farm and Gehling Auction into the city limits.

Since the property at the junction of Highways 52 and 16 already border the city, the owners of both properties desire access to public utilities and wastewater facilities available through the city of Preston.

At the public hearing, which took place during the council meeting, City Administrator Joe Hoffman introduced the issues at hand for the final approval for the annexation to take place.

The two properties seeking annexation currently belong within the Fountain Township; compensation to the Fountain Township is necessary insofar as the taxes are concerned.

Previous annexation to Preston from the Fountain Township took place in 2006 with the Doherty property. At that time, Preston and the township agreed upon a compensation to be a payment equal to three times the taxes of that year.

As Hoffman met with the township supervisors at the beginning of March, the township agreed to the same solution for this year's annexation. The state requires the payment be made into two different portions. Because of this, the compensation projected to total around $1,200 will be divided into two separate payments, made no later than Dec. 31, 2015, for the first payment and Dec. 31, 2016 for the second.

The second issue discussed in the public hearing was planning and zoning the area. The 6.15 acres belonging to Preston Dairy and Farm have been recommended to be zoned as industrial and the remaining 1.86 acres designated as a highway commercial zone.

The industrial classification was defined as places with bulk sales and retail, while the highway commercial classification supports highway type businesses such as gas stations and implement dealers.

Hoffman described the complication with these zoning classifications as being the land is currently developed and will be redeveloped. In addition, an auction house, such as Gehlings, does not appear in the zoning ordinance.

Previously, Fountain Township classified the property as being industrial, but the Planning and Zoning Commission recommended the 1.86 acres be zoned as highway commercial property.

The council approved adopting a resolution to adopt the ordinance of annexation.

The ordinance states that once the Chief Administrative Law Judge of Minnesota approves the annexation, the annexation ordinance will become effective on that date.

Other council meetings set up for further discussion on this topic will take place on Monday, April 7, and Wednesday, April 9, after the approval is given by the state for the annexation.

Project Twenty-14

Along with the discussion of the property annexation to the city came the consideration of the bids for the Twenty-14 project, slated to begin in a few months.

City Engineer Brett Grabau presented the two bids received for the upcoming street and city improvements. Although the improvement areas fall under one project, bids were accepted by dividing the area into two separate portions, one to the north and one to the south.

Only two contractors showed interest in the projects, however. The bids themselves were higher than the engineers anticipated as well. Grabau credited this to the fact material costs have risen and the economy is turning around, giving contractors the opportunity to again charge prices seen six years ago.

The contractors bid on both portions of the project. In the northern portion, A-1 Excavating, Inc., based in Bloomer, Wis., won the bid for a little under $1.8 million dollars. The second contractor, Blitz Construction based in Byron won the bid for the southern portion for almost $1.4 million dollars. Both companies will be utilizing the same subcontractors increasing the chance for the project to be completed faster.

As a result of the project, there will be a property tax increase to help pay for the improvements. The increase will remain a one-time 3.3 percent increase, though it will be maintained at that level in future years. However, if the city keeps the assessment of that percentage to what they were before the bids came in, the levy would lower to 2.2 percent. If this approach is taken, the council will need to make decisions in the fall for making up the 1.1 percent difference.

Presently, the council will likely take out a bond to finance the project. Based on last week's bond rates, the rates themselves have remained consistent at a low, which would prove good for the city. As Hoffman computed the rates and payments of debts to be paid off in the next few years, he already anticipates a new street project in about five years.

The council must make a decision on how much money to apply for in the bond, but it will have to do so without receiving the industrial bids for the project.

Hoffman will be presenting more options on this problem at future meetings, but one suggestion is to add $1 million to the bond so the city only has to take out money once. This would also lessen issuing costs.

The council approved two resolutions accepting the lower of the two bids from the contractors for both portions of the Twenty-14 project.