Winsted City Council Minutes

City of Winsted

City Council Special Closed Meeting

Council Chambers

June 12, 2007

5:30 p.m.

 

Present:                        Mayor Steve Stotko

                                    Council Member Tom Ollig

                                    Council Member Tom Wiemiller

Council Member Bonnie Quast

                                    Council Member Dave Mochinski

                       

Staff Present:                        Brent Mareck, City Administrator

                                    Deb Boelter, City Clerk-Treasurer

                                    Fran Eggert, City Attorney

 

Mayor Stotko called the meeting to order at 5:30 p.m.

 

Mayor Stotko stated that the purpose of the meeting is to discuss possible litigation of the Old City Hall.

 

The Council discussed possible litigation of the Old City Hall.

 

Mochinski motioned to have the City Attorney, Fran Eggert, send a certified letter to Todd and Kelly Colonna stating that the City of Winsted is invoking it’s reverter to the non-performance of the purchaser in working on the building from a period of more than 60 days; and if the Colonnas fail to execute a quit claim deed the City of Winsted will take the appropriate legal action to have the title revert to the City’s name.  Quast seconded.  Motion carried 5-0.

 

Quast motioned to adjourn.  Wiemiller seconded.  Motion carried 5-0.  

 

 

 

Respectfully submitted,

 

 

 

Deborah R. Boelter

City Clerk-Treasurer

 

 

 

City of Winsted

City Council Workshop

Council Chambers

June 12, 2007

6:00 p.m.

 

Present:                        Mayor Steve Stotko

                                    Council Member Tom Ollig

                                    Council Member Tom Wiemiller

Council Member Bonnie Quast

                                    Council Member Dave Mochinski

                       

Staff Present:                        Brent Mareck, City Administrator

                                    Deb Boelter, City Clerk-Treasurer

                                    Fran Eggert, City Attorney

 

Mayor Stotko called the meeting to order at 6:00 p.m.

 

Mareck presented the possible options for the City Center and Lakefront Promenade project.

Option One (1) would be to accept the bids that were received on June 5, 2007 and fund the project by using a combination of a Capital Improvement Bond, Economic Development Authority (EDA) Lease Revenue Bond, an Equipment Certificate, Inner-Fund Loan and 2007 Budget cuts.

 

The City would lease the lower level of the building from the EDA, which consists of the City Council, Don Guggemos and Paul Wiebel; however, the City would have to give up $140,000 in redevelopment grant dollars for acceptable terms to the lease.  The grant calls for the property to stay in public ownership in perpetuity, which will not work under a lease revenue bond.  Bond holders need to have a security in the building should the City default, which would not be possible if the building had to remain publicly owned.

 

The City would set a public hearing for July 3, 2007 and would follow the same process as it did to approve the Public Works building.  The EDA would follow a similar process for its bond issue.

 

The City would have an inner-fund loan from the General Fund to be paid back in four years and would also supplement industrial park land sale profits and 2007 budget cuts to fill the remaining funding gap.

 

The City has until August 5, 2007 to accept the low bid.  Should a special session occur during this process the City would drop this option and simply accept the special legislation.

 

Mareck presented a spreadsheet detailing the expenditures and revenues, proposed budget cuts, and the source of the inner-fund loan for the City Hall and Lakefront Promenade under the proposed funding of option one (1).

 

Steve Mattson, Northland Securities, Incorporated, was present at the meeting.  Mattson distributed a copy of the schedule for the EDA Lease Revenue Bonds for funding of the Community Center and Lakefront Promenade, and explained the requirements of a lease revenue bond.

 

Mattson then distributed a copy of the schedule for the Capital Improvement General Obligation Bonds for funding of the City Hall.  Mareck and Mattson noted that the City would not have a new additional tax levy.

 

Don Guggemos, 137 Fairlawn Avenue East, asked if it would be more cost effective if the Minnesota State Legislature would have a special session and approve the City of Winsted’s request for special legislation to bond for the City Center and Lakefront Promenade project.  Mattson stated that it would be more cost effective but when Governor Pawlenty vetoed the Omnibus Tax bill, the City of Winsted had to explore other funding options.

Mattson recommended that the City continue with the process to purchase EDA lease revenue bonds and capital improvement general obligation bonds in an effort to avoid possible interest rate increases.  Mattson stated that if the Minnesota State Legislature would hold a special session and approve the City of Winsted’s special legislation, the City would discontinue the sale of the EDA lease revenue bonds and the capital improvement general obligation bonds.

 

Mochinski asked Mattson if the interest rates listed on the proposed schedules for both bonds was a conservative number.  Mattson stated that Northland Securities, Incorporated can purchase the bonds today with the interest rates listed on the schedule but they may be higher in the future.

 

Mareck presented Option Two (2) which would be to reject all the bids received on June 5, 2007 and re-bid the building, directing the architects to re-design the building.

 

There are some modifications to the building that could potentially save the City money on the project.  These areas include prevailing wage, windows, and other miscellaneous items or the City could do a significant re-design of the project to save money. There would be additional architectural fees and an uncertainty of the impact on the bidding process.  There would be no guarantees on the financial savings due in part to less bidders, construction increases and possible winter construction.

 

Mareck stated that Option Two (2) has some risk in that the City would be rejecting a bid that is well below budget, in the hopes of being even further under budget.  In addition, the project moving forward may seem in doubt in terms of public perception.  If the City was to move forward with this option, additional public feedback would be sought should the changes be significant.

 

Mareck then presented Option Three (3) which would be to reject all bids after August 5, 2007 and wait for State legislative action.

 

This could happen sometime this fall (special session) or at the latest in February, 2008 when the legislature meets again.  It appears that the City would be expedited through the process; however, there are no guarantees that we would not be included in the Tax Bill again and consequently we would have to wait until the end of the session.

 

The City would incur fees for re-bidding and would almost certainly face an increase in construction costs for the project.  The architects are estimating about $750,000 in increased costs to the project for a spring 2008 bid date.  As with Option Two (2) delays to the project will almost certainly damage public perception of the project.

 

The City would save some money under Option Three (3) by only having one bond issue.

 

Mayor Stotko stated that the City has a window of opportunity and should proceed with Option One (1).

 

Ollig motioned to schedule a Public Hearing for July 3, 2007 at 6:00 p.m. to consider the issuance of general obligation capital improvement bonds for the City Hall project.  Wiemiller seconded.  Motion carried 5-0.

 

Quast motioned to adjourn.  Ollig seconded.  Motion carried 5-0.  

 

 

 

Respectfully submitted,

 

 

 

Deborah R. Boelter

City Clerk-Treasurer


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