City to move ahead with bond sale for water tower costs
Published 3:17 pm Tuesday, August 24, 2021
The Albert Lea City Council voted 4-1 Monday to move forward with the sale of $7.15 million in general obligation water revenue bonds to pay for the new central one-million gallon water tower downtown.
The bonds will also pay for the demolition of the old tower at the same site.
Rebecca Kurtz with Ehlers, a public finance advisement firm, said the bonds will be paid back over a 21-year term with water utility revenues. She said she was expecting an interest rate of about 2% and noted last week rates were 1.7% for a similar issue.
The council voted to also pay a $500 fee to participate in the state’s credit enhancement program, which allows the city to use the state’s AAA rating for the sale in an attempt to receive a lower interest rate. Kurtz said based on where she has seen interest rates, the city should be able to receive a lower interest rate with the state’s rating that will bring savings that will more than pay for the enhancement fee.
Kurtz said as part of preparing for the bond issue, Ehlers completed a utility rate study and is recommending a 2% increase in the water rates for the next five years to support the $430,000 a year that will go toward the project starting in 2023. It is recommending a 5% increase to cover the water tower and other planned capital water projects, along with inflation, in the next 5 to 10 years.
The council will award the sale Sept. 27 with funds available around Oct. 21.
The $7.1 million figure includes an additional $155,000 in fees related to the sales of the bonds, including cost of issuance, Ehlers’ fees, county fees, a rating agency fee and about $85,000 that is available for the underwriter.
The total cost also includes contingency equal to about 10% of the project, City Engineer Steven Jahnke said.
First Ward Councilor Rich Murray asked several questions related to the costs and ultimately was the sole vote against the resolution.
Mayor Vern Rasmussen Jr. and Councilor Jason Howland were absent from the meeting.
In other action, the council:
- Approved reimbursing the Albert Lea Economic Development Agency for the infrastructure costs that helped provide impetus for the sale of property for the new Vortex Cold Storage facility off of 14th Street, which is expected to be a minimum of 150,000 square feet of cold storage.
Under the resolution, the city will pay ALEDA $20,000 for the next 20 years for a maximum of $400,000.
Rigg said the city’s payment will be covered by the increase in electric franchise fees when the business is open. He also noted that the business is expected to create at least 26 jobs.
A few of the councilors thanked the entities that made the project happen, and Mayor Pro Tem Larry Baker said it would be a “feather in the hat of Albert Lea.”
- Authorized the city to enter into a limited use permit with the Minnesota Department of Transportation for two separate but related projects in 2022. The city and MnDOT will construct a 10-foot-wide shared-user trail along East Main Street from Garfield Avenue to the East Main Street split as part of a MnDOT project and again from the split to County Road 38, which is a city project. Both portions of trail are within MnDOT right-of-way and will require the permit to construct and maintain the trail, according to Rigg.
- Approved a letter of support for the Shell Rock River Watershed District to the Lessard Sams Outdoor Heritage Council for continued habitat restoration projects in the watershed district.
- Approved the second reading of an ordinance that makes some changes to the city’s boards and commissions.
Rigg said the new ordinance allows for a business owner or someone with a related skill set to join a board or commission even if they don’t live in the city limits. They must, however, live in Freeborn County.
Board members could potentially also serve additional terms if requested than in the past if there are no others interested in joining that board or commission.
Rigg said the changes were to encourage and retain quality board and commission members.
- Witnessed the ceremonial swearing-in of two new police officers and one new firefighter.
- Heard from Lisa Hanson, owner of The Interchange Wine & Coffee Bistro, and a few others regarding Hanson’s lease with the city and the city’s recent requirement that masks be worn in city-owned buildings.
Keith Haskell questioned how issues are put on the agenda and said he tried to find out how to get on the agenda and then was denied.
Hanson read an excerpt from the Declaration of Independence and spoke in opposition to the city’s new requirement for people to wear masks to receive service at City Hall.
She asked how the decision was made to re-implement masks, as it was not voted on at the council.
“We want our liberty and freedom to choose,” she said.
- Adopted a new climate action plan for the city.
Look to the Tribune for more about the plan in a future issue of the Tribune.