Board hesitates on courthouse funding
Published 12:00 am Wednesday, September 4, 2002
The county board’s position on financing the courthouse project was obscured Tuesday as the commissioners returned to the bonding issue. Facing a huge crowd and pressure to reconsider its decision to rule out a referendum on courthouse funding, the board tabled the subject.
The board voted 3-2 to go with a combination of three types of bonding, all of which do not require a referendum, during a special meeting last week.
But Tuesday, Commissioner Dan Belshan urged the board to reconsider and entered a motion to proceed with general obligation bonds with a referendum. A motion for tabling was entered by Commissioner Dan Springborg and passed 4-1.
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&uot;I want the bonding to be the lowest possible rate. And that is not lease-revenue bonds,&uot; said Belshan. &uot;I don’t know why we would do that.&uot;
The original resolution was to issue $9.1 million in general-obligation jail bonds, $7.5 million in LEC lease-revenue bonds and $8 million in leased-revenue courthouse bonds.
While the first two bonding options require a county levy to pay back, the leased-revenue courthouse bonding does not. Therefore, the interest rate becomes 0.2 to 0.25 percent higher, according to bonding firm Evensen Dodge.
Belshan said the county can save around $17,000 on the annual installments by employing the general obligation bonds for the courthouse portion, combining them with the bonds for the Law Enforcement Center.
The shift, if it happens, also will change the tax allocation significantly. Under the general-obligation bonding option, agricultural non-homestead and seasonal recreational properties are exempt from taxation and a flat rate is applied to agricultural homestead properties, while the rest of properties end up sharing the excess burden.
General obligation bonds exceeding an amount defined by the law require a referendum.
County Auditor/Treasurer Dennis Distad said that a decision to have a referendum would have to be made by Sept. 17, if the board would want to have it at the general election in November. Otherwise, there would be a special election, and the issuance of bonds would likely be put off to the next year.
County Administrator Ron Gabrielsen defended the original resolution, pointing out that administration cost for a referendum and the delay in starting to repay until 2004, could nullify the savings from the general-obligation bonds.
An estimate by Evensen Dodge shows the annual payment for non-referendum bondings starting 2003 is $2,050,819, while one for referendum bonds starting in 2004 is $2,152,872 under the same interest structure. It means if the county does not meet the 2003 budget plan deadline in December to include the bond payment, the total debt service would increase.
Referendum proponents, formed under a newly established organization called the Committee for Fairness, brought an attorney to assert the Aug. 27 resolution to rule out the referendum bond option was invalid.
Waseca-based attorney Thomas Kraus contended the proceedings violated the state’s open meeting law.
Kraus pointed out that the board recessed the meeting for ten minutes with a pledge to move on to next items on the agenda that were unrelated to the courthouse. But when the meeting continued, commissioners continued to discuss the bonding issue and voted for the non-referendum option. A lot of audience members present at for the courthouse issue left during the recess.
&uot;We are not talking something that doesn’t have an impact on them directly. This is something that affects, basically, every citizen in Freeborn County,&uot; Kraus said. &uot;That affects directly their pocketbook. Before that happens, don’t you think they should have a right to be heard about if they really want this thing or not?&uot;
He said the group is demanding the board void the vote they took on Aug. 27, and the
hear more details about the options and decide whether there should be a referendum.