Aldermen discuss financing options for streets, sewer extension for new development
During the regular Aug. 5 meeting of the Concordia Board of Aldermen, the board heard discussion with Joe McLiney of McLiney and Co., a bonding company, concerning options for financing street repairs.
At a previous meeting, the board voted to make repairs to 7th Street in the area of the post office a priority. The city consulted with an engineer and received an estimate of $350,000 to $450,000 to complete the repairs. McLiney met previously with City Administrator Dale Klussman and Alderman Dwight Emde about different options for bond financing. At the Aug. 5 board meeting, Klussman reviewed these options with the board, and McLiney presented figures for other options.
McLiney stated he doesn’t like to finance streets for more than the life of the streets, which is typically 10 years. One option presented would be to receive the same amount of funds over two four-year cycles instead of one 10-year cycle.
Investors on a 10-year loan would want a bond reserve. McLiney proposed a $690,000 loan over 10 years and have four projects completed, rather than a loan of $450,000 over a 10-year loan and only one project completed. The 10-year loan would not require a bond reserve. He stated the market is currently a half-point away from being at an all-time low.
“He stated if we get the bids for what projects we want to do, he will get the bonds in the amount of time needed,” Klussman stated. “The board needs to understand if we leave a reserve of $19-20K a year and if we turn to asphalt, we still need to maintain the chip seal; we can’t walk away from it. Northwest 8th Street would be a maintenance program and have no capital improvements.”
Klussman presented documents showing the difference in interest paid, among other things, if the city chose to proceed with a series of four-year programs instead of a 10-year program.
Based on the average amount of sales tax income from past years of $82,265, Klussman stated if the city funded one project every 10 years at an estimated cost of $500,000, the estimated annual payment for bonding would be $65,129.80. This formula would allow for a $17,135.20 reserve and an estimated $127,575 in interest payments.
Using the same sales tax amount of $82,265, a formula based on completing one project every four years at an estimated cost of $690,000 would allow for an annual payments of $65,900, with $16,365 left in reserves. Interest would be quite a bit lower, coming in at an estimated $55,800.
A motion was made and approved unanimously by members present to move forward with the four-year plan.
In other business, the board held a discussion of a request by the developer of Alpaca Acres for city participation in laying the north 100 feet of sewer line extension to serve the new development. The estimated expense to the city would be $15,000. Klussman said it is a requirement from the Department of Natural Resources that the sewer line be completed up to the property line, but it was not required years ago when other developments were completed.
The owner of Alpaca Acres is requesting the city’s help in participating with hooking the sewer line through lot 1 so it would open everything else. It is estimated it would be about 95 feet to lot 1.
Mayor Michael Brown stated the city has a chance to develop an area in Concordia and sees it as an investment and feels it should be done. A cost/benefit analysis will be needed, as the city requires it as a participation requirement.
A motion was made and approved unanimously to allow the city to do a cost/benefit analysis with the owner of the development to allow the city to possibly pay for the 95 feet of sewer line extensions to serve the new development at an estimated cost of $15,000.
A public hearing for discussion and citizen input on the topic of 2019 property taxes was set for 7 p.m. Aug. 19. The meeting will take place in Room 202 of the Concordia Community Building.