By Patrick Tepoorten

The Rush City Council and Chisago County HRA-EDA Director Chris Eng announced on Oct. 8, that a settlement has been reached with one of five parties involved in construction issues at the Rush City Community Center and senior apartments.

Don Baker and Associates (DBA), the architect on the project, settled with the city through mediation and has agreed to pay the city $25,000.

Four other parties, Milcon, Northern Technologies, Blue Sky Builders, and Jay Brothers Inc., either did not participate in mediation or did not agree to a settlement as a result.

The situation, which has pitted the city and the HRA-EDA on one side and contractors on the other, is a result of a series of problems with the construction of the facility, not the least of which was the parking lot, which the city and HRA-EDA had to reconstruct. All in all, the city and HRA-EDA is seeking redress of $130,000, not including attorneys' fees.

The case will now go before a district court judge in Chisago County, who will decide whether to hear the matter in front of a jury, or send the parties to binding arbitration.

Eng called the settlement with DBA a good start, but added that there is still a long way to go before the issue is resolved.

In other city news:

• Northland Securities' Paul Donna was instructed by the council to put together a proposal for conducting a water and sewer rate study that will include not only usage but hookup rates, also known as WAC and SAC.

For now, the city is focused more on generating funds to pay down a Public Facilities Authority (PFA) loan than generating income for future improvements. The PFA loan payment is $400,000 annually and had been getting paid through a combination of water and sewer funds and a TIF district that is now defunct.

As a worse case scenario, the city approved a 50.9 percent proposed levy increase, roughly $100,000 of which was to be used to cover a portion of the PFA debt. The rate study is a means to lessen the burden on the 2008 levy. But, to do that the city will have to work fast in order to have estimates for rate and hook-up fee increases before mid-December, when it must finalize the 2008 levy.

"We need this done yesterday," said Mayor Jim Ertz.

• Donna was also instructed to pursue a private bond purchase agreement with local banks for bonds directed at Rush Landing and Jay Ave. road improvements. The city council instructed Donna to negotiate a 15-year bond debt service schedule, with an early pay-off clause at such a date that won't increase the interest rate or come with penalties.

The city has yet to set the private assessment schedule for the projects, but is expected to do so following a public hearing the week of Nov. 12. No final date has been set yet, bus is expected soon.

• A petition from 25 residents along 1st Street W., Field Ave., and Eliot Ave., was presented to the council, asking the city to take action to reduce reckless driving in the area. In part, the petition read, "Our streets are repeatedly used as drag strips."

Councilor Mick Louzek agreed with the petitioners, saying, "It is a danger," and noted the area is used widely by children walking to and from school. Administrator Mell was instructed to have Chisago County Sheriff's deputies take a close look at the area and report findings at the next meeting.

Ertz also instructed Mell to inform affected residents the city is "taking this issue seriously."

• Six acres of JOBZ land were formally given to Chisago City to facilitate a move into Chisago County by Kendall Howard, a Twin Cities based company specializing in technology equipment.