City moves on bonds for projects
By Kay James, Dells Events
The Wisconsin Dells Council’s Finance Committee directed the city clerks to work with the city’s bonding company to pursue bonds through the state’s trust fund for sewer lift stations and the expansion of the Kilbourn Public Library.
Also possible might be issuing bonds for a new police station and expansion of the city’s municipal building, the committee indicated at its meeting Monday. In all, including library, police station, municipal building, lift stations, the city’s share, $150,000 of replacing the Illinois Avenue Bridge, and a police video tape drive, the projects total $8, 975,000 plus financing and legal fees.
City Clerk/Treasurer Dale Darling and Assistant Clerk Nancy Holzem are to work with Dave Anderson, of Public Financial Management of Milwaukee, on the bonds.
Anderson presented information on proposed city capital improvements for 2010, but also recommended that the city seek $1 million in bonds through the state’s trust fund that would be designated Build America Bonds this fall. Anderson said by designating the bonds as Build America Bonds, the federal government would pay 35 percent of the interest on the debt.
The motion to pursue the financing included making the decision by the end of the year as to whether the first $1 million would be for sewer lift stations on the west side of the city and on Vine Street or the library.
Anderson said the state has a $1 million limit on borrowing now, but after March 15, 2010 when it receives repayment of loans, it will have more funds available. Then the limit could as much as $4 or $5 million.
For the lift stations, the city is seeking loans and grants under the Clean Water Act, and it does not know how much those will be or if it will receive them. The lift stations will cost about $3.5 million including interest and the city already has a $1 million grant for them. Bonds for the sewer lift stations would not be general obligation funds, as would ones for a police station, municipal building or library. Those bonds would be repaid by the sewer users through the sewer rates. Anderson said the city would have to raise sewer rates to repay bonds.
If the city would issue bonds for other projects, they would be repaid with city property taxes. If the city borrowed for the library, it would be paid for with the library’s funds, which come from the city, village of Lake Delton and Sauk and Columbia counties. The library does not have the authority to issue bonds so has to go through the city. The library is estimating an expansion would cost $2.5 million and for the city to borrow those fund would increase the tax rate for the city’s indebtness by $0.09 per $1,000 of assessed valuation, according to Anderson’s report.
If the city were to build just the police station at a cost of $4 million, the tax rate for the city’s indebtness would increase by about $0.34 per $1,000 of assessed valuation. For the police station and the municipal building, the increase in the rate would be about $0.68 per $1,000.
Darling asked if the police station were built, could the city absorb the operating costs. He said he expected the maintenance costs would be higher in a larger building.
Alderperson Joan Ragan, chair of the committee, said new buildings are more efficient.
"Now is probably a good time to move in that direction," Darling said, and making application to the state trust fund seems prudent.
Helland said the city could "leverage" grants on the sewer lift stations with the bonds and the city was fortunate to be able to take advantage of the programs available.
Anderson also said that on the lift stations if the city could not get the trust fund bonds, it could go for community development loans.
Anderson also advised the city to borrow from its TIF funds to pay for its interim share of the costs of replacing the outfall pipe at the Wisconsin Dells-Lake Delton sewer treatment plant that was broken when Lake Delton drained last summer. The river is also being dredged as part of that project to ensure that the pipe is in deep water. The river at that point filled with sand from the breech site.
The city’s cost is estimated to be $603,000 with the majority of it paid this year since the project is already under way. The city expects to get much of that back through grants.
Anderson said to meet IRS regulations the city has to pass a resolution on the pay back of the funds and he also suggested the city designate those bonds as Build America ones so it could qualify for the 35 percent payment of interest by the federal government.
Holzem said she thought such a resolution had already been passed as part of the authorization on the project, but she would check to be sure. If not one would need to be approved at the November council meeting.