Posted: 8/4/04
By MaryHelen Swanson
Good news awaited members of the North Branch City Council meeting Monday night, July 26.
When Kathy Aho, the cityís financial consultant, got up to finalize the bond sale for public improvement projects, she said the cityís bond rating had been upgraded from A3 to A2.
And that is good, she noted.
The higher the rating, she explained, the lower the borrowing costs.
In a report from Moodyís Investors Service, it was noted that ìthe A2 rating and upgrade reflects the cityís moderately-sized and rapidly expanding economic base; sound financial operations evidenced by health and stable reserves ...î
Moodyís, it was noted, expects the cityís strong economic growth to continue because of the advantageous location 45 miles north of the Twin Cities.
It was also noted that the cityís tax base has grown at the rate of 20.6 percent over the last five years.
Aho was pleased, as was the council, when they awarded the sale of $5,325,000 general obligation improvement bonds Monday.
The money is to be used for various street improvement projects and improvements to the water and sewer utility system.
More good news came with the interest rate for the bond sale.
Aho was expecting a rate of 4.57 percent. The bid from low bidder Legg Mason Wood Walker, Inc. was 3.9879 percent. There had been seven bidders on the bonds. The council approved the sale to Legg Mason.
Not everything agenda item was as uplifting as the bond sale, however.
Significant discussion ensued on a proposal from the cityís economic development authority to purchase and resell a piece of property south of Perkins along I-35 in the commercial development known as Gateway South.
Finance director Dave Stutelberg presented the proposal which had been approved by the cityís EDA board earlier that day on a 5-1 vote.
It appears that William Sandison and Jerome Peterson own two parcels of land and are having difficulty selling them.
As the men noted at the meeting Monday night, the water and sewer connection charges and street improvement costs, which could add up to more than $350,000, are so high no one can afford the property.
The proposal calls for the EDA to purchase one of the parcels for $225,000. The sellers would ìgiftî the second parcel to the city.
On the very day of the purchase, the EDA would sell the property, both parcels, to a developer for $225,000 . The current assessed value of the two parcels is $575,000.
The rationale is that this would make it possible for the developer to build a commercial building and pay the WAC, SAC and trunk fees and future improvement assessments.
By doing this, the city would have control over what kind of business would be built and number of jobs without using a TIF or tax abatement.
Stutelberg maintained that this would be a win-win situation for the seller, the city and the developer and that it would a good way to increase the tax base and provide additional jobs.
Stutelberg said the developer, who remained unnamed, could not say what his plans were for the land. He said it could be for an office building, but in six months that could be different.
The property is zoned commercial.
Stutelberg noted that if the property owners sell outright, the city would have no control over what kind of business goes in.
Mayor Gloria Karsky repeatedly asked what financial impact the deal would have on the city.
Stutelberg repeatedly said none. He said it would complete the Gateway South project.
He also said that going through this process, the developer would not be allowed to let the property sit and would have to have started building within one year, although an extension could be possible.
Councilwoman Kathy Blomquistís concern was with the ìgiftingî concept, although she was told that the city had done it before with the Anderson and Olson properties. The city apparently has no formal policy on gifting. Stutelberg said it has been used on a case by case basis.
Blomquist felt the council would set a precedent and any individual or developer who canít sell his or her property could be coming in for the gifting process.
Councilwoman Amy Oehlers moved to deny the proposal saying it was not fair to the taxpayers to bail out someone who canít make a profit. She said she didnít know why the city had to be a third party in this deal.
Blomquist seconded Oehlerís motion, but it failed on a 3-2 with Councilmen John Pace and Rod Lofquist and the mayor voting no.
Mayor Karsky moved to table the issue to to Aug. 9 to be sure there would be no negative impact to the city. Oehlers supported her motion to table.
Because Stutelberg will be on vacation the week before the next council meeting he asked the councilors to get their questions about the proposal to him by e-mail.
Mayor Karsky said she would be looking for the positive and negative affects on the city. Oehlers said she wanted more information on past ìgiftingî done by the city. The motion to table passed 3-2 with Pace and Lofgren opposed.
In other business, the council:
ï heard a legislative update from Rep. Pete Nelson who talked about the cost of lobbying, reverse auction on e-bay, the bridge project and the frustration of the legislature not addressing a bonding package.
ï was asked by citizen Theresa Furman why the city contracts for Culligan water services when it has its own water and sewer systems. She was promised an answer at a later time. Citizen Barbara Burrington mentioned that she had asked why the city uses Chemlawn and that she was going to get an answer also.
ï approved the purchase of 8.5 acres by the cityís Economic Development Authority from Goose Creek Preserve, LLC, in the area being labeled the ESSBY Project at $27,500 per acre or a total of $233,750. The ESSBY Project is a large parcel of land northwest of downtown North Branch adjacent to the freeway which is being developed by the city in a planned process. The city has obtained a loan for $1 million from the Greater Minnesota Housing Fund part of which will be used to pay for this land.
ï discussed with city engineer Julie Dresel a proposed policy that would defer assessments on large tracts of agricultural property or subdivisions until time of development. The city already has provisions for deferrals for age or disability.
ï agreed to get a restricted appraisal from Lake State Realty Services on the current library building for an amount not to exceed $1,800.
ï agreed to hire, at a cost of $15,500, Maxfield Research to do a study on demand for housing and commercial space in North Branch, particularly in connection with the ESSBY Project.
ï received a report from the Minnesota State Demographer showing that the 2003 population estimate for the city is 9,399, with 3,309 estimated households.
ï denied a transient merchant license to Yilin Shen representing Southwestern Company. Shen sells childrenís books. The denial was made based on a recommendation of the cityís police department.
ï tentatively set 6:30 p.m., Thursday, Aug. 12 as the date for the groundbreaking for the new library.
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