Meeting held to discuss proposed bonding projects
Apr 13, 2018 10:07AM ● Published by Editor
After being introduced by county administrator Jeff Cadwell, Bruce Kimmel of Ehlers Inc. gave a brief rundown of the county’s proposed bonding projects to a packed crowd that had gathered in the commissioners’ room on Monday, April 9.
Kimmel first explained that Ehlers was an independent financial advisory company that helps local governments, school districts, and state agencies with financial planning.
Many on hand were curious to learn about what was in the proposed general obligation bond (not to exceed $9,875,000) that the county seeks to issue to pay for a bevy of projects.
Kimmel said 74 percent of the notes would be paid back by the half-cent Greater Minnesota Transportation Sales and Use Tax that was passed by the commissioners on September 27, 2016, and the rest would be paid back with levy dollars.
Because interest rates are still low, and because Cook County has a Standard & Poor AA bond rating the county could expect to get a 20-year bond issue for a fixed rate of three percent, Kimmel said.
Over 20 years that would mean the county will spend approximately $13.3 million to pay back the $9,875,000.
While interest rates are still low, the annual cost of construction is rising 5-7 percent per year, said Cadwell.
By putting projects together and bonding for them at one time, Kimmel said this was the most cost-effective means of achieving the desired capital improvement plan (CIP) and Capital Notes financing, and is expected to yield the lowest possible interest cost while reserving future payment flexibility for the county.
Kimmel noted that while the bond agency couldn’t change the terms of the bond, the county would have that option at the ninth year. If interest rates were to go lower, the county would have the opportunity to obtain that lower interest rate.
When asked why the county would issue bonds before getting bids back on projects, Cadwell explained the county could wait until May 21—the date of the bond sale—and downsize the financial obligation to meet the bids if they come in lower than projected.
Based on reserves and the AA bond rating, Cadwell said Cook County’s bond limit is $48 million.
Projects paid for by the Transportation Sales Tax will total $6,925,842. Those include $549,000 for engineering for County 42-45. Spending $5,149,054 for design and construction of (CSAH 17) the Mineral Center Road, as well as $80,000 for CSHA 15 engineering and a bridge replacement on County Road 71 at Carlson Creek. Also included was $316,800 for CSAH 5 at Lutsen Mountains which will be used to replace the Brule River bridge.
All told, the bill to pay back the 2018A Series Bonds will be $511,400 annually for 20 years.
Projects funded by the county levy total $2,015,058.
Administrator Cadwell presented those projects, starting with $297,543 to fix the courthouse roof and windows, and $27,514 to repair the law enforcement center windows. Community Center outdoor park improvements total $725,000 with $15,000 going to upgrading the lighting at the Cook County Community Center and other county facilities that meet the eligibility to be financed under the Act and the Plan.
Plans for the Community Center also include a new, more substantial warming house and refurbishing the playground that will include a new area for 0- to 5-year-olds to play in.
Construction of a new public works shop in Hovland is projected to cost $850,000, but $950,000 will be sought to include funds needed for improvements to the county’s public works facility located on East Fourth Avenue in Grand Marais.
When Arvis Thompson asked Cadwell if those costs could be lowered, especially the cost to replace the Hovland public works facility, he replied that if the current workshop weren’t fixed or replaced, it (the shop) wouldn’t meet OSHA standards.
“The lights don’t work, and the concrete is busted up,” Cadwell said, adding that the 2,300-square-foot building was too small to house $1.2 million highway equipment that should be stored there.
The current proposal calls for a new 6,000-squarefoot shop to take the current one’s place. Cadwell said initial plans called for a 7,200 new public works facility in Hovland, but those were downsized to make the building more affordable.
To repay the bond debt covered by the levy, the county will pay $144,700 for 20 years.
Thompson next asked why the buildings that needed to be repaired weren’t better maintained so it wouldn’t cost as much to fix them when a problem came up.
Administrator Cadwell responded by saying the leaking roof in the courthouse needed to be fixed a couple of years ago, but commissioners chose not to have it repaired until now. “We have leaking in the north wall near computers,” he said. He also pointed out that the county has about $120 million in facilities to maintain and as of now, doesn’t have a line item for building maintenance in its budget, but commissioners were beginning to look at forming one.
Equipment funded by the levy
Administrator Cadwell listed equipment the county proposed to bond for: $170,000 for Pictometry; $60,000 for sheriff squad computers; $14,000 for the Zeuker 911 program; $16,000 for network printer replacements; and $19,000 for new election ballot counters.
All told the county will bond for $399,000.
The county will pay $76,000 annually for six years to pay off the bond debt.
Cook County Community Center Director Diane Booth was asked to speak to the parents and children who were in attendance who had come to learn about the hockey rink and playground.
When it came to the warming house, Booth said plans to build a new warming house began in 1998 when people realized the small warming house that had been transferred from the recreation park in 1994 wasn’t big enough to meet the needs of the skaters. That attempt to get a larger warming house failed as did attempts made in 2000, 2005, and 2009.
“These guys have been working for a long time to get a new warming house,” said Booth, pointing to the parents and grandparents in the back of the room.
Similarly, Booth said attempts were made in 2015, 2016, and 2017 to get funds to upgrade the community park. These parents have also waited a long time to see the park improved.
Tuesday, April 10 county board meeting
Commissioners conducted a public hearing on April 10 at 10 a.m. to provide the community further chance to express their views concerning the county’s Capital Improvement Plan (CIP) for 2018 through 2022.
At that hearing, Arvis Thompson asked about the county’s debt load and debt service, and Cadwell said that a summary of the county’s current and proposed debt could be developed and made available shortly.
Following the public hearing, commissioners voted unanimously to approve a resolution declaring the county’s intent for the issuance and sale of general obligation capital equipment bonds notes for $480,000, which will be used to purchase equipment.
Commissioners also approved a resolution calling for the sale of $9,545,000 on general obligation bonds, Series 2018A.