WRIGHT COUNTY BOARD MINUTES
MARCH 10, 2015
The Wright County Board met in regular session at 9:00 A.M. with Husom, Sawatzke, Daleiden, Potter and Borrell present.
Husom moved to approve the 2-24-15 County Board Minutes as presented. The motion was seconded by Borrell and carried unanimously.
Petitions were accepted to the Agenda as follows: Timed Item F.1., “Recognition” (Borrell). Daleiden moved to approve the Agenda as amended, seconded by Borrell, carried 5-0.
On a motion by Borrell, second by Husom, all voted to approve the Consent Agenda:
Authorize Signatures on Revised Drainage Inspector Contract, Eff. 1-06-15 to 12-31-15 (increasing to $42.50/hour)
Authorize Signatures on I.U.O.E. Local No. 49 Labor Agreement, Effective 1-01-15 through 12-31-16
Authorize Signatures On Wright County Deputy’s Association Labor Agreement, Eff. 1-01-15 through 12-31-16
Refer Motor Pool to Ways & Means Committee
Refer Human Resources Director Position to the 3-11-15 Personnel Committee Meeting
Authorize Signatures on Memorandum Of Understanding with Non-Union Employees for donation of vacation to an employee
Authorize Signatures on Memorandum Of Understanding with Teamsters Local 320, Courthouse Unit, for donation of vacation to an employee
Approval Renewal of Seasonal On Sale Liquor License for Whispering Pines Golf Club
Approve Renewal of 2015 Tobacco License for:
1. City of Monticello: Monticello Country Club
J. INFORMATION TECHNOLOGY
1. Network Analyst.
K. SHERIFF’S OFFICE
Request County Board to accept and sign the MN DNR 2015 Annual County Boat and Water Safety Grant in the amount of $20,964
Adam Tagarro, IT Director, introduced Matt Anderson who was recently hired in the Information Technology Department as a Technical Support Specialist.
Bob Hiivala, Auditor/Treasurer, requested approval of the Cantin Addition Plat in Corinna Township. Sawatzke moved to authorize signatures on the Cantin Addition Plat, seconded by Husom, carried unanimously.
Hiivala asked the Board to authorize signatures on the Fred Jude Plat in Corinna Township. Daleiden moved to approve signatures on the Plat, seconded by Borrell, carried 5-0.
Hiivala presented the 2-17-15 Tax Forfeit Committee Minutes. Hiivala said the purpose of the Meeting was to review property located in South Haven. The County Attorney’s Office has indicated that the City may be able to obtain the property as blighted land for $15,000. Potter said the City planned to discuss this property at their March Meeting, but the topic has been delayed to the April meeting. Borrell moved to approve the Tax Forfeit Committee Minutes, seconded by Daleiden. Sawatzke clarified that the motion is to offer the property to the City at a cost of $15,000. The motion carried unanimously. The Tax Forfeit Committee Minutes follow:
Brian Asleson gave background into the parcel 115-010-007090. Serenity Path had came requesting a reduction in the price back in January, which was not granted by the county. But in doing more research, Brian found that the City of South Haven can purchase this parcel under the Blighted Land statute at less than market value, and then re-sell to Serenity Path. Brian had spoken to the City of South Haven and they are in favor of this purchase. Borrell questioned if it would go for sale to the general public, and Brian responded with no this reduced price would only be eligible to the city and no one else. Borrell inquired what amount of taxes was owed at the time of forfeiture; Denise explained to him that taxes are wiped at time of forfeiture. Tony brought up the fact if that building gets cleaned up it is a benefit to the city. Borrell said he would like to try to work with them and reduce the price to $15,000 plus fees. Borrell said if Serenity Path won’t pay for it at that price someone else will. Potter seconded the motion of $15,000.
(End of 2-17-15 Tax Forfeit Committee Minutes)
Hiivala requested approval to hire a temporary employee to assist in the License Bureau while an employee is on leave. The desire is to maintain customer service. Borrell moved to approve a temporary employee in the License Bureau. The motion was seconded by Daleiden and carried 5-0.
Hiivala said employee benefits include a flexible spending account. The account is used by employees to defer some of their income to a medical expenses account. Effective in March, the County switched vendors from TASC to SelectAccount. Previously, TASC covered employee expenses and were paid back as funds were withheld from the employees’ checks. Hiivala explained that SelectAccount will not upfront the funds needed for the flexible spending accounts, and an account needs to be set up for them to draw from. Hiivala asked for authorization to transfer $50,000 from the County’s bank account to a Flexible Spending Account at Klein Bank, which will be paid back in December. He clarified that this is not an expense for the County as it involves employee funds. This request will be presented annually. Husom moved approval of the $50,000 fund transfer, seconded by Daleiden. The motion carried 5-0.
On a motion by Daleiden, second by Borrell, all voted to approve the claims as listed in the abstract, subject to audit, for a total of $747,172.01 with 279 vendors and 493 transactions.
Launette Figliuzzi, Veterans Services/Nuclear Director, brought forth discussion on the Veterans Transportation Program to the St. Cloud VA. This topic was discussed at a recent Ways & Means Committee Meeting. She said this issue has concerned veterans for some time, and is contacted almost daily with requests to obtain some mode of transportation to St. Cloud VA doctor appointments. Some Minnesota counties have transportation programs, either provided through the county or through Disabled American Veterans (DAV). The focus of DAV, undertaken on a national basis, is the transportation of veterans to their VA appointments.
Figliuzzi was also approached by the Director and leadership of the St. Cloud VA Office expressing interest in assisting Wright County with a Veterans Transportation Program. She introduced Patricia Aljets, Voluntary Services Program Manager, from the St. Cloud VA Health System, and Trent Dilks, DAV Transportation Coordinator/VA Hospital Services.
Figliuzzi said there are three components to offering a Veterans Transportation Program:
1. Administration and Planning Phase. This is the stage they are currently at and includes review and development of plans and agreements, figuring demand, pre-planning for route selection, and review of what the community is seeking.
2. Recruitment of Volunteer Drivers. A partnership would be formed with the VA volunteer services. That would entail a recruitment initiative through community meetings and seeking volunteer drivers. The process would involve a specific screening, physical, application, background check, fingerprinting, training, and annual re-certifications.
3. Actual Implementation of Program. This topic was presented to the Ways & Means Committee who recommended presenting this to the full County Board for consideration.
If approved, Figliuzzi anticipates implementation in early May, providing time for a vehicle to be donated through the DAV to the VA. The VA will maintain the vehicle and provide insurance and gas. The VA will recruit drivers. What is being asked of Wright County is to provide permanent housing for the transportation van at an area accessible to volunteer drivers as early as 6:00 a.m. and into the evening hours, possibly through a lock box for the key. Figliuzzi stated that Lee Kelly, County Coordinator, communicated with Public Works and space is available to house the van at that location.
The plan is to provide transportation two days per week (Tuesday, Thursday) with two different routes per day. This will allow veterans to request VA doctor appointments based on when transportation is available. Figliuzzi stated the VA has a long-term history of accommodating transportation schedules. She reinforced there needs to be flexibility, alternating routes accordingly while considering demand.
Borrell asked whether a special license is required for drivers. Alijets said there is not. A 10 to 12 passenger van will be used. Dilks said a Ford Flex will be used initially. Daleiden referenced the draft Memorandum of Understanding which reflects that the Director, Human Resources or Designee is responsible for conducting appropriate background checks, driving record report and submitting the OF 345 to the National Driver’s Registry. He said it appears that the VA takes care of all of this. Alijets said that the St. Cloud VA Health System office conducts the background checks and processing of drivers.
Daleiden made a motion to approve the Memorandum Of Understanding with the St. Cloud VA Health Care System for the Veterans Transportation Program. The motion was seconded by Borrell and carried unanimously.
Greg Kryzer, Assistant County Attorney, asked the Board to set a Public Hearing on the Zoning Application of Advanced Disposal Services, Inc. to rezone approximately 323 acres from AG General Agricultural to I-1 General Industry. The Planning Commission is expected to make a recommendation on the application on 3-19-15. Daleiden moved to set a Committee Of The Whole Meeting on 3-31-15 at 6:30 P.M. for the Public Hearing on the Zoning Application of Advanced Disposal Services, Inc. Husom seconded the motion and it carried 5-0.
Sean Riley, Planning & Zoning Administrator, and Joe Jacobs and Kerry Saxton from the SWCD were present to provide a buffer grant status update (FY 2015 Clean Water Funds grant opportunity). This topic was last discussed at the 2-24-15 Board Meeting. At that Meeting, the County Board directed staff to complete an inventory on two townships so discussion could occur on costs and funding available for enforcement and for farmers. The motion also directed staff to prepare a draft grant application for review.
At today’s County Board Meeting, Jacobs provided maps and information on two townships that were inventoried:
Victor Township. The Township has 7.28 acres that are lacking the 50’ buffer and 6.19 acres that are currently enrolled in CRP. The CRP Program generally includes a 10-15 year contract. After that, land could be returned to row crops. If the County pursues the buffer grant, those types of acres could be identified.
Corinna Township. The Township has 1.08 acres that lack the 50’ buffer setback, and 0.24 acres that are currently enrolled in CRP.
The maps presented reflect the locations of lakes, DNR public waters, and County ditches within the Townships. A contour map was provided reflecting an example of a lake area with no natural buffer (along road systems that are next to lakes, where there is a field next to the road). Jacobs said this is common across the County. There are situations across the County where water outlets through a pipe or a culvert into the lake, and that is not addressed with the 50’ setback requirement. If an assessment is performed, these types of areas could be identified.
Borrell asked whether staff looked at embankment areas that involve water flowing away from the lake. Jacobs said that the 50’ setback is met in most areas that involve a steep embankment. Per law, the 50’ setback is from the ordinary high water mark. Daleiden had concern with the conflict with ditch law (16’ setback on either side of the ditch). Jacobs stated that the law reflects if waters are included in the State public waters list, they are included in the 50’ setback. If not, they are considered a county ditch and revert to the one rod setback.
Sawatzke attended the Environment and Natural Resources Policy Committee at the AMC Legislative Conference. Legislation may be introduced this year relative to the 50’ buffer setback. He understands exemptions have not yet been determined. Jacobs said the buffer grant is different from the Governors initiative.
Saxton said existing State law establishes public waters and there is a map reflecting those waters. He said the Governor’s initiative has yet to be determined, and it will be an entirely new initiative. He thought it would be unlikely that it would pass this Session. Sawatzke said Board members may be experiencing confusion on the difference between the two. Saxton replied that the 50’ setback is and has been State law. The Governor’s Initiative applies to the same 50’ setback but it may apply to a wider array of things, such as ditches.
Sawatzke referenced a bill requiring county ditches to be re-determined by 2020. Saxton said that there is another bill being considered which would require this for all ditches that have not been re-determined since 1977. Sawatzke viewed that as an outrageous expense if there is no benefit. Saxton said the County has many ditches. Discussion would need to occur on whether to abandon some of them. The other concern is the availability of Ditch Viewers. He did not envision that all ditches could be completed because there are so few Ditch Viewers. Borrell suggested waiting to see what happens with the Governor’s initiative. Otherwise, the County may have to go back and re-inventory.
Daleiden referenced the $1 million in FY 2015 Clean Water Funds Grant funding pool and asked if staff knew how much of that funding remains. Saxton said based on information provided last week, he estimated about 25%.
Daleiden made a motion to table the Buffer Grant until the 3-17-15 County Board Meeting to allow time for more review. The motion was seconded by Sawatzke and carried unanimously.
Riley said the City of South Haven has lost the services of their private Building Inspector. The City is interested in having the County provide this service. Riley met with the City to review a draft contract, fee structure, and duties performed. Riley said the County should be able to meet this request. Sawatzke made a motion to authorize Riley to negotiate with the City of South Haven on Building Inspector services and to bring a draft agreement to the County Board for review. Sawatzke said that the agreement should cover all costs at a bare minimum. The motion was seconded by Husom. Sawatzke asked whether this will require the hire of additional Planning & Zoning staff. Riley said it will not. The motion carried 5-0.
The Meeting recessed at 10:05 A.M. and reconvened at 10:14 A.M. for the Employee Recognition Ceremony. Annually, the Board recognizes employees for individual and group achievement. The recipients of the 5, 10, 15, 20, 25, 30 and 35 Year Service Awards were announced. Teresa Doerr was recognized for 35 years of service. Those recognized for 30 years of service include Colleen Day, Thomas Decker, Randy Erickson, Thomas Fedor, Brian Jans, Thomas Kelly, David Nystuen, and Carol Schefers.
The Individual Achievement Award was presented to Kevin Shrode of the Highway Department. Virgil Hawkins, Highway Engineer, said Shrode is an outstanding employee who goes above and beyond his job duties. He was described as being knowledgeable in his field and having great work ethics and an uplifting attitude. Hawkins said these are the qualities that make the difference between a good and great employee.
Brian Jans, Shop Maintenance Supervisor, said Shrode has been a diesel mechanic since 1-03-11. Shrode previously owned an automotive business so has exceptional knowledge for his position. Jans said Shrode possesses a positive attitude, has a great work ethic, and has the ability to troubleshoot and diagnose. He said Shrode works in ways that results in a savings to the County. Examples of this include bringing diagnostic equipment from home to save time and the cost of the County buying the equipment. He has assisted with County vehicle breakdowns at night and done so with his own truck and tools to save time and money. Shrode also assisted the Sheriff’s Office with repair of the airboat when it was not working and needed to rescue snowmobilers. After that incident, he worked with the manufacturer to troubleshoot and repair the airboat. He also worked after hours to repair frozen lines for the salt brine maker at the French Lake Shop. Jans said Shrode has taken the initiative to attend evening classes that relate to his position. Positive feedback has been received from other employees about Shrode’s efforts. Jans said one of Shrode’s comments is, “Let’s go make some money for the County!” Shrode was thanked for his outstanding service.
Laurie Davis, Case Aide-Human Services, and Tony Rasmuson, Interim County Assessor, were the Individual Honorable Mention recipients (nominated for the Individual Achievement Award).
The Group Achievement Award was presented to the Employee Wellness Committee. Members include Carol Barnaal, Jill Hylla, Michelle Sandquist, Louise Cavalliere, Steph Kunkel, Tracy Janikula, Joel Torkelson, Kelly Hiestand, Tammi Vaith, Mandy Jordan-Lemmerman, Tim Dahl, Carlie Fergason, Melissa Janzen, Steve Jobe, Danielle Lee, Andrea Zachman, Stacy McCauley, Kristie Rathmanner, Marc Mattice, Heidi Davis, Jessica Baker, and Karen Guinn.
The Wellness Committee was nominated for the Group Achievement Award by Chris Brazelton, who served as a long-time member and Chair of the Wellness Committee. Prior to leaving employment with Wright County, Brazelton nominated the Wellness Committee for this Award. Jill Hylla read a letter from Brazelton on the nomination which references how the group has grown in the last decade, and how they have faced challenges and successes. The Wellness Committee was nominated for the success realized in bringing Wellness opportunities to all Wright County employees. A few benefits were mentioned on how the Wellness Committee’s efforts have been valuable to Wright County including: 1) Healthy employees use less sick time, are more productive, and provide more focus on serving the public; 2) Healthy employees need less medical care and therefore, have less impact on premium costs; and 3) Saving costs to the County. Daleiden said the Wellness Committee is a great group of people dedicated to helping Wright County and the employees.
The County Board extended thanks to the Awards Review Committee Members including Brian Johnson, Kim Johnson, Jessica Miller, Susan Vergin, and Tanya West.
Borrell recognized the efforts of Tony Rasmuson, Interim County Assessor, and the staff of the Assessor’s Office. The Assessor’s Office has been working without their department head. Sawatzke said Board members also received an email from a Wright County citizen citing the efforts of the Assessor’s Office as well.
An Owner’s Committee Of The Whole Meeting was held on 2-24-15. At today’s County Board Meeting, the following correction was made to the Minutes: Page 3, 7th paragraph, 2nd sentence, change the word “rents” to “rates” (Daleiden). Daleiden moved to approve the Minutes as corrected, seconded by Sawatzke, carried 5-0. The Owner’s Committee Of The Whole Minutes follow:
1. Public Works Financing And Bond Issuance
Kelly said he has been monitoring the progression of the Public Works project. It will soon be time to discuss the financing of the project, as they approach the conclusion of the design phase and the compilation of cost estimates. The County Board passed a resolution stating the County’s intent to reimburse itself through the issuing of bonds. Costs have been incurred for the design that have been tracked and will temporarily be paid for from the Capital Improvement Fund. Kimmel will speak about the process and answer any questions. This is also an opportunity to review options for refunding existing debt. Finally, this meeting offers the opportunity to determine the direction on how to proceed. There has been discussion regarding bidding out services for bonds. Kelly said it would be good to have that direction from the Board, knowing it will take several months to get the process moving. The most recent timeline he saw for the Public Works project is to begin building in July 2015.
Kimmel said he will provide background on where the County stands financially and how refinancing the existing debt could change the County’s debt profile. He discussed the County’s current debt service. There are two bonds outstanding. The County has $45 million dollars left on the Jail Bond from 2007. The payments extend through Fiscal Year 2029. Debt service is about $4 million to $4.4 million over the remaining term of those bonds per year. There is also a much smaller bond issue left from 2012 with $1.4 million remaining, with debt service of approximately $160,000 to $170,000 per year that goes through 2023.
Kimmel referenced the Memo to the County Board (Memo), dated 2-24-15, Subject: Public Works Financing & Series 2007A Refunding Scenarios (see attachment).
Kimmel understands that the Public Works Project cost and scope are still to be determined. The scenarios listed in the Memo are meant to be illustrative and not definitive in terms of cost or what the financing would look like. He said there were basic assumptions made about repayment terms and how the bonds would be structured for payment. The County Board has complete discretion on how to shape the repayment of the bonds. With the County’s bond rating and the current demand for General
Obligation paper, investors will gladly accept whatever bonds and in whatever shape the Board decides to issue them.
Kimmel said the new debt service estimates provided are straightforward and simple. They include:
1) Financing $16.3 million dollars of Public Works costs on a stand-alone basis, with bonds issued the Spring of 2015; and
2) Another bond which would combine the Public Works money with a “cross-over” refunding of callable Jail Bonds (those due in 2018 2029).
Kimmel said Page 1 of the Memo summarizes the results and provides a context for the estimated market rate conditions. The three scenarios are:
1) Public Works Financing Issued Stand-Alone:
In this scenario, the bond amount estimate was just under $16.5 million. The additional $180,000 would be for the underwriter’s discount, Bond Council legal fees, financial advisory fees and other miscellaneous costs. The total par amount would be $16,480,000, with an assumed repayment term of 21 years (Fiscal 2016 2036); an estimated true interest cost of 3.26 percent, and estimated annual payments of $1,092,300. Kimmel said this scenario is with level debt service. It is not shaped to fit around any existing debt.
Kimmel said if the Board combined the Public Works financing with Jail Bond refinancing, the County could save money with greater economies of scale. Placing the $16.5 million Public Works Bond within a larger bond issue reduces issuance costs somewhat, and potentially the interest rate. Kimmel said there is a wider market for larger bond issues compared to smaller ones. The rate differential is only an estimate. These options are outlined below:
2) Public Works Financing Issued with Jail Bond Refunding:
Kimmel explained that the Board should think of this option as part of a larger bond issue. The estimated par amount would be about $35,000 cheaper than on a stand-alone basis at $16,445,000 (versus $16,480,000 in the stand-alone option). The 21-year term is the same, with a true interest cost of 3.11 percent, or about 15 basis points of improvement. This scenario estimates annual payments of $1,074,000 or a savings of about $18,000 per year, and a total debt service advantage of $397,000 (including the initial interest payment).
Sawatzke asked if Kimmel would sell this as one bond. Kimmel said yes. Sawatzke asked why there is a difference in interest rates between the two. Kimmel replied that the Jail refinanced portion has a shorter maturity. General Obligation Bond investors don’t care if you have several purposes with different maturity schedules combined into one bond issue. This would allow the County to achieve economies of scale.
Husom asked why the Jail Bond Refunding would start at 2018 versus Fiscal 2016. Kimmel referenced the second set of documents beginning with “$57,225,000 General Obligation Bonds, Series 2015” (see attached), and explained the concepts behind the “crossover” advance refunding. He reminded the Board of the call date of 12-01-17 for the Jail Bond. There are two different ways to do an advance refunding by selling the bonds in 2015:
1) Crossover Refunding:
This involves selling the bonds now but continuing to pay the old debt service in 2015, 2016, and 2017. On the call date of 12-01-17, the County would “crossover” and start paying on the new bonds. The County would realize savings in 2018 through 2029.
2) Full Advance Refunding:
This option would allow the County to change out immediately to new funding in 2015. This option would require the County to sell more bonds to cover all the debt service. The costs are higher with this type of refunding compared to the crossover. However, with the crossover, Kimmel said the County would not realize any savings until 2018.
3) Jail Bond Refunding Issued with Public Works Financing:
Kimmel said the estimated par amount for this purpose would be just under $40.8 million, with an assumed payment term of 12 years after the call date (Fiscal 2018 2029). The estimated true interest cost would be 2.46 percent, with an estimated annual net savings of $387,000 ($4,644,500 total). The Present Value (PV) savings as a percent of existing debt service would be 8.962 percent. Minnesota law requires a 3 percent PV savings for an advanced refunding.
Kimmel said the Board has to decide what makes sense for the County. Past Boards have expressed interest in advanced refunding versus waiting for the call date. There are valid policy discussions from either perspective.
Kimmel directed attention to Page 2 of the Memo that addresses the potential savings and losses with an advance refunding. He said if interest rates stay the same or decrease, the County would benefit by waiting to do an advance refunding closer to the call date. At this time, the County is contemplating the cost of a new project. Some might ask whether there is merit in refinancing the existing debt service to offset new costs if the County is taking on a new obligation.
Borrell asked whether the County could take money out of the Reserve Fund and lend it to an entity, and two years from now package it all together (basing his assumption that rates stay the same for the next two years). Kimmel said absolutely. That would be called an interfund loan. The Board could pass a reimbursement resolution and do an internal funding. The Board would be reserving the right to bond the project in the future.
Sawatzke said it is difficult to predict. Borrell said the whole decision is based on estimated savings. There is a risk involved and a possible cost to refund prior to the call date.
Sawatzke asked what basis point increase would represent a break-even point for the County. He referred to Kimmel’s comment that if the rate goes up 75 basis points (equivalent to 3/4 of a percent interest), it would cost the County $2.4 million. He asked Kimmel how much money the County would save if it stays the same. Kimmel replied that the County would save about $1.5 million. Sawatzke asked what the break-even basis point was for the County. Kimmel said he would have to run the data on a standalone basis to provide that information. The current numbers are calculated on combined funds.
Kimmel said the market is volatile on the low end. The trend line on Page 2 of the Memo shows that current rates are the lowest they’ve been in the last thirty years. After the low point in December 2012, rates went up 175 basis points over nine months. Then, in December 2013, rates came back down, dropping almost to the December 2012 low point. Kimmel said he does not know what rates will do. He said many market analysts say the 20-year low benchmark of 3.3 or 3.4 percent rate is a floor that investors won’t go below unless something catastrophic happens. The market got close to that point in 2012 and 2014. The market could go past the high point in 2013. There is no way to know for certain. It is possible rates could jump almost 200 basis points in a matter of months.
Sawatzke said the global economy is sluggish. Indicators aren’t necessarily pointing toward a big jump in interest rates. Kimmel agreed. Sawatzke said if for some reason rates are higher two years from now, the County won’t necessarily lose this money. The Board could wait a year or two to refinance when times were better. He feels there are more factors in the County’s favor than against.
Kimmel said sometimes unexpected events or factors cause bond rates to increase. If equity markets continue to do well, bond rates could go up. World events, for example, could push rates down. Presently, they are about zero. The information he is presenting is meant to outline the advantages and disadvantages of issuing stand-alone financing for the Public Works project or locking in $4.6 million in savings by combining it with a refinance of the Jail Bond debt service. A third option would be to gamble that future refunding would present greater savings.
Sawatzke asked for the interest rate on the Jail Bond. Kimmel referred to the last page of the second handout entitled “Prior Original Debt Service.” The average coupon is 4.7715617 percent.
Sawatzke asked about today’s rate. Kimmel said it is 2.5 percent.
Borrell asked how long it would take to implement new funding on the Public Works project if rates started to rise. Kimmel referred them back to Page 3 of the Memo. It would be a three month process to put the new funding in place. The County would be required to hold a public hearing for a Capital Improvement Plan Bond. A reverse referendum window of thirty days is required to allow a citizen to file a petition if they desire to block the sale of the bond.
Kimmel went over the preliminary bond issuance estimated timeline on Page 3 of the Memo, including authorizing and publishing a public hearing notice in the official County newspaper, holding the public hearing, allowing a thirty day window, and selling the bonds. Kimmel said it takes three months from the time the Board votes on the bond to receive the money. Kimmel said refunding without new financing does not require a public hearing. This process would take 1.5 to two months. This would consolidate all remaining bonds.
Husom said the greatest saving appears to be the third option where the interest is 2.46 percent, with an annual net savings of $387,000, or $4.6 million total. Kimmel said those are the savings on doing the Jail Bond financing now. He said she was correct; the Public Works project combined with the Jail would be at about a 3.11 percent rate for the new money. Combined, the County would be looking at nearly $5 million in overall savings as opposed to doing the Public Works stand-alone and nothing else at this time.
Kimmel said the County is currently rated AA+ by Standard & Poor’s. That is the second highest rating. He said the County has a fighting chance to upgrade its rating to AAA. Even though the proposed bond issuance would be a lot of debt, it is low compared to other counties and cities. The Public Works project would not adversely impact the County’s ability to get credit. Analysts look at fund reserves, demographics, tax base, and other factors. Debt does not weigh heavily on the County’s credit score. The main criteria are for the County to have a plan to manage the debt service.
Daleiden asked what the advantages of an AAA rating are over an AA+. Kimmel said the County would see about 15-25 basis points of improvement over twenty years. Daleiden said that would be at most a quarter percent. Kimmel said that would represent a big benefit on a large bond issue. Daleiden asked what the cost would be to try for an AAA rating. Kimmel said the cost is no more than getting any other rating. The County will get a rating whatever financing the Board decides to do. The County has a high rating already. Standard & Poor’s makes the determination. His initial estimates indicate the County has a distinct possibility to obtain the higher AAA rating.
Hiivala said the last time the County had a call with the bond raters, the raters indicated that the County was close to an AAA rating, but its high dependence on major taxpayers factored against raising the rating. Hiivala said that situation has changed. Kimmel said the tax base has increased as well. Hiivala said the County should be close now to an AAA rating.
Kimmel referred to Page 2 in the second packet, “Debt Service Schedule Issue Summary” for the $57,225,000 General Obligation Bonds, Series 2015 (the total bond package with new Public Works financing and refunding the existing Jail Bond). During the 12 years when they overlap, the payment would be about $5 million per year. After that it would drop to a little more than $1 million per year after the Jail Bond was paid off in full. This is how the overall bond issue would look.
Kimmel said the Page 1 of the second handout lists sources and uses of funds; Page 2 is the overall combined bond issue; Page 3 is the new money on the Public Works Building. Sawatzke said the numbers between all the bonds do not add up to $5 million. Daleiden said the County would not be paying for them both initially. Kimmel explained that in the first couple of years of a crossover refunding, the County would not pay for both the old Jail Bond and the refunding. The escrow pays for the new bonds, or the Jail refunding, until the crossover date. He directed the Board to look at Page 3 and Page 2 to see the net benefit to the County. Hiivala suggested that Kimmel arrange the data so that the Board could see what the actual dollars are to the County for 2015, 2016, and 2017.
Borrell said if the County used money from the Reserve Fund to pay for the Public Works project, the County could hold off on the refunding until the right time. Hiivala said in order to liquidate County investments, he would have to start calling in maturities, although some may charge penalties. Markets have come down, and the County would lose money. If the Board wants him to do that, Hiivala said he needs to know to reinvest accordingly.
Kimmel suggested another scenario. He understands that there are potentially other projects being contemplated for the future. One possibility would be to finance the new money now on a stand-alone basis, or do the new money now in combination with a partial advance refunding of the Jail Bond now, and a partial advance refunding of the rest in 2016 or 2017. If the Board decided to try to obtain an AAA rating, $5 million of the Reserve Fund balance could be used without harming that rating. Some of the cash could be applied to the refunding in order to reshape how the debt service is paid out over the last twelve years. The Board has unlimited options in terms of timing, use of cash, use of debt, or splitting the refunding now or later. His role is to give the Board ideas on how these scenarios would look and their potential impact.
Potter asked if it would make sense to do the future Courts Building project with a refunding of the Jail Bond. Sawatzke said he hopes the County would finish this project before beginning another. The County will be $57 million in debt once this bond is issued. He said this project will increase the County’s debt level to its highest level. Kimmel said $40 million of that amount is existing debt.
Kimmel said city financing has more revenue streams than the County, such as special assessments, taxes, water, and sewer revenues from which to pay debt service. The County’s income stream is solely ad valorem tax revenue. If rates stay the same, the Board could do the Public Works financing now and the Jail Bond later, and still take advantage of future markets. The County will be in the market in 2018 regardless. Whether the debt service is from advance refunding or new money, it is all being paid from the same revenue source. The interest rate cost or benefit also gets averaged out.
Hiivala asked Kimmel to explain the advantages of combining the two debt services into one issuance. Kimmel said if the County did the Public Works financing now, and the refunding a year from now, it would probably be more like a couple hundred thousand dollars of overall difference. Hiivala asked what the costs would be if the County issues the new bonds now and the refunding bonds next year. Kimmel said those costs altogether would be about $150,000. Hiivala said that is another quantifiable savings in favor of issuing the bonds together.
Sawatzke said the Board is not in a hurry on the Public Works project. He asked when the bonds would be sold if the Board acted tomorrow. Kimmel said the bonds would be sold in May and close in June. Sawatzke said at best the bids will go out in July. No significant money will be spent until the contractors start work. They will not need to be paid until September. The Architect and the Owner’s Representative will need to be paid sooner, but he presumed those contracts will not exceed the County’s reserves.
There was discussion about the amount available short-term in reserves. Sawatzke said there was enough to carry those contracts until September. Hiivala said he was more concerned about carrying construction costs. Sawatzke said if they wait to issue bonds that would diminish some of the numbers.
Hiivala asked if the Board would like Kimmel to illustrate how a $50 million bond issue is broken down for bond investors. When the County issues these bonds, call dates are established. The call date guarantees the investor that they will receive a certain interest rate until a set period of time. After the call date, the County may refinance at will.
Kimmel said in the past, ten-year call dates were common. In this market, Kimmel said it could be less. Investors expect rates to go up. Looking at this debt profile going out to 2036, Kimmel said if the Board decided to move forward with the 21-year repayment on the Public Works Building, he thought the bonds could be sold with a call date of 2023 (an 8-year call). There would be another opportunity to refund, by keeping the Jail portion the same. The County could then do another refunding of the last part of the Jail Bond if market conditions warrant. This is also true of all of the last 13 years of the Public Works Building Bond. Kimmel said it is easier to have earlier, more aggressive call dates than later ones in today’s market without incurring a penalty.
There was discussion about the benefits of making semiannual principal payments instead of annual. Kimmel said it is possible to do so if the Board chooses, but the interest savings would be minimal, and the interest rates would not be less. The convention is semiannual interest payments and annual principal payments.
Sawatzke asked Kimmel to explain how many basis points the County would be charged to do the advance refunding two and a half years in advance. Kimmel said it would be 30 to 60 basis points. Sawatzke said the County would pay about a half percent more to do the advance refunding two and a half years early. Kimmel said that would be if interest rates stay the same. Sawatzke said if the Board decided to go forward with the advance refunding, they would be gambling that the rates would go up more than a half percent. The half percent would be the “premium” the County would pay.
Daleiden asked Kimmel if there would be an advantage to pay the Public Works Bond off in 15 years instead of 21. Kimmel said absolutely. Daleiden asked whether there would be an interest rate advantage. Kimmel said yes. He suggested keeping the Public Works debt at as short a term as possible, but advised that there will be higher annual payments. He highly recommended going with a shorter term if the County budget allows. However, a shorter term would raise the levy. Kimmel said they might get better interests rates on a 15-year Bond than a 20-year one. Sawatzke said the levy is the challenge.
Sawatzke said one way to absorb the higher payment would be to take some of the Budget turn back money in the first year, and then gradually pay back more each year. He said he wished they were a year and a half down the road to wait until 2017 to issue bonds. Borrell said maybe the Public Works project should be postponed. Sawatzke said there would be a penalty to the Architect and other contractors.
Kelly said he did not hear direction from the Board to begin the bonding process with approval at the 3-10-15 Wright County Board meeting. Borrell said it would be good to see how much liquidity the County could raise in the next year to lower the bond amount on the Public Works Building. Daleiden said they should look at a number of options, including length of term. Sawatzke would like to know how much turn back money is available from 2014.
Sawatzke said if the project is set to start in July, he sees no compelling reason to start this process on 3-10-15. Contractors will not have to be paid that soon. Hiivala said the County has the liquidity to pay the Architect and Owner’s Representatives. His main concern was construction costs.
Kimmel said selling bonds in September is a good time to be in the market. October and November are not as advantageous. There was discussion of reverse referendums and elections, and how they could affect bond issuance.
Potter said to wait to issue until August 1. He asked Kimmel about any costs to delay issuance. Kimmel said there is no direct correlation between what the Federal government does and how the municipal markets reacts. The market could go either way. Our clients should issue bonds when they need the proceeds. That is the best way to go. Kimmel said the County is in good financial situation. He urged the Board to take pride in that reality.
Kimmel said there is an opportunity for the County to save $4.6 million by refunding. If market rates stay the same and the Board opts not to do the refunding now, the County might save $5.5 million. If the Board waits to issue bonds and rates go up, the County might still save $3.5 million. Either way, the County could save money. The Board must determine when the time is right, and how the opportunity can be maximized for the benefit of County taxpayers.
Daleiden asked if the County could take any savings realized and pay the bond off faster. Kimmel said yes. The model he presented captured the savings to defray the cost of the new Public Works Building. If the Board preferred to take the savings and accelerate the Jail Bond, that would reduce the term by approximately 1.5 to two years. The County could allocate the savings to pay the debt service, keeping the net level at $4 million, but paying it off earlier. Daleiden said the long-term plan must be determined, including future projects, such as a new Courts building.
Recommendation: Informational only.
(End of 2-24-15 Owner’s Committee Of The Whole Minutes)
A Ways & Means Committee Meeting was held on 2-25-15. At today’s County Board Meeting, Husom clarified that the St. Cloud VA was selected for the Veterans Transportation Program due to the interest in transportation to this facility. If at some point there is interest in similar transportation to the Minneapolis VA location, that discussion could occur. Husom moved to approve the Minutes and recommendation. The motion was seconded by Daleiden. Sawatzke stated that this is a great opportunity and it is the first time the VA has made this offer. Transportation for veterans was looked into a number of times in the past by the prior Veteran Services/Nuclear Director, but it was not feasible due to insurance for volunteer drivers. In this scenario, the VA will be responsible for that. The motion carried 5-0. The 2-25-15 Ways & Means Committee Minutes follow:
I. Veterans Transportation Program.
Figliuzzi introduced Aljets and distributed the following documents (see attached):
1) Information Paper regarding the History of the Veterans Administration Volunteer Transportation Network (VTN);
2) Aerial photo of the proposed Veterans Services van location at the Public Works site;
3) Line drawing of the Public Works site location;
4) 2013-2014 Wright County District map;
5) Sample Memorandum Of Understanding (MOU) regarding parking the van at the Public Works site.
Figliuzzi said she has heard a lot about the need for transporting veterans to the St. Cloud Veterans Administration (VA) Medical Center. The Twin Cities Metropolitan Area has another VA Medical Center in Minneapolis, and a community-based outpatient clinic in Ramsey. Figliuzzi said a majority of veterans prefer the St. Cloud VA facility. Figliuzzi said the Veterans Services office receives phone calls weekly from veterans requesting rides to the St. Cloud VA Medical Center. Figliuzzi said these requests have been accomplished informally with veterans agreeing to drive another veteran on their own time and expense to and from appointments. However, it places an unfair burden on the veterans willing to do this.
Figliuzzi said she learned recently that the St. Cloud VA Medical Center wants to accommodate Wright County veterans. The goal is to increase the numbers of veterans using the VA. She believes a majority of veterans would do so if they had reliable transportation.
Figliuzzi said a few months ago she was approached by an offer to meet the transportation needs of veterans in Wright County that presented no cost or burden to the County. The Disabled American Veterans (DAV) is part of a nationwide initiative to fund vans for communities to assist veterans with transportation to medical appointments. Figliuzzi said there are still costs and risks associated with this process to some degree. The DAV has a person stationed at the St. Cloud VA, and someone assigned to coordinate transportation.
Aljets said the VA accepts donated vans for this program. The VA is responsible for all van maintenance, including fuel. Volunteers are required to undergo a physical screening. The VA also ensures that volunteers maintain their credentials and competencies. The main concern of the VA is the safety of the veterans being transported.
Husom said the Veterans Transportation Service is given the van and ensures that drivers meet the standards. Aljets said the VA has someone in St. Cloud to coordinate the program. The program needs a central place in Wright County to park the vehicle where the volunteer drivers will have access.
Kelly asked what time the van leaves in the morning. Figliuzzi said the proposal would be to run the van only two days a week at this point. Aljets said she anticipates a great deal of demand once the program is launched. They would also like the van to service the Ramsey and Minneapolis clinics. Sawatzke asked what time the van would leave in the morning. Aljets said it could be as early as 6 A.M. The DAV traditionally goes door to door, which makes the trip longer. The decision between door-to-door service and centralized pickup points has not yet been made.
Sawatzke suggested a keyless entry for the van, and leave the key inside the vehicle. Kelly said Virgil Hawkins, the Highway Engineer, offered the spaces indicated on the aerial photo mentioned previously. It is an outside spot, but plug-ins are available. There are a total of four outside parking spots available for future vehicles, if added to the program.
Sawatzke said when the new Public Works Building (PWB) is built, there will be more room for inside parking. If a totally enclosed space is essential, perhaps one of the Public Works vehicles could be parked outside and the DAV van on the inside until the new building is completed. The next issue is access and storage of the vehicle key. Public Works staff does not arrive until 7 A.M. on most days, and sometimes later. Husom suggested putting a lockbox on a pole. Aljets said she would need to verify that a lockbox was an acceptable solution.
Sawatzke said if there were multiple drivers, they could each get a key. There was discussion regarding potential van parking sites and key lockboxes. Kelly said the driver(s) could be assigned card key access for the outside vestibule door at the PWB, and a lockbox could be installed inside the vestibule. The driver(s) would not have card key access to the inside vestibule door into the building.
Figliuzzi said a centralized pickup point may work best. Veterans can get a ride to the Monticello American Legion, for example, and catch the van there. Aljets said the goal is to break down county barriers. Some counties got grants for their residents to use. It doesn’t make sense to have three vans pass each other on the road. Aljets said everyone wins if counties collaborate.
Aljets said the DAV began providing vehicles for transporting veterans in 1986. Sawatzke asked what kind of stipend the drivers receive. Aljets said neither the VA nor the DAV pay the drivers. Sawatzke said the VA covers the vehicle maintenance costs and gas. In the past, insurance was an issue for the County. Husom said this arrangements makes that situation much easier.
Sawatzke asked Figliuzzi if she asked Hawkins about indoor storage for the van, and whether indoor storage was critical in the winter. Figliuzzi said it helps a lot if the drivers can get warmed up inside the facility.
There was discussion about other indoor and outdoor parking options and the size of the van, including outside the Government Center by the West door near the Assessor’s office. That location has plug-ins, and would work as a temporary solution.
Aljets said the van will arrive by the end of March. There was further discussion about the spots available outside the West Government Center door, and the possibility of renting enclosed storage from the City of Buffalo.
There was discussion about the process to follow if a van didn’t start and whether a non-County worker could drive another County van in an emergency. Sawatzke said the Highway Department has three mechanics that could possibly repair the vehicle and provide routine maintenance. The County could bill the St. Cloud VA. Aljets said that was a good option. Sawatzke said the County could sell the VA fuel from the County pumps.
Kelly asked for clarification regarding where the van would be stored outside until the new PWB is completed. Sawatzke said there are two good options: Outside the Government Center by the West door, or at the PWB site. Kelly said the key arrangement is critical. They dismissed access by the West door, as the card key allows access to the entire building. The PWB has an outer vestibule. Card key access could be restricted to the outside door of the vestibule only, with a key lockbox inside the vestibule. No access would be allowed through the inner vestibule door.
Figliuzzi said she will draft a Request for County Board Action for the 3-10-15 Board meeting. Aljets will accompany her to that meeting. They will solidify plans for pickup locations by then. Husom asked whether the Buffalo van would pick up veterans at their doors, or establish centralized locations for them to catch the van. Aljets said that decision has not yet been made. DAV tends to favor centralized pickup spots. If a veteran has no way to get there, that situation will be evaluated on a case-by-case basis. Figliuzzi said Sherburne had to change from door-to-door to designated locations, as the volunteer driver was behind the wheel for 14 hours in a day. Sawatzke said another volunteer driver could pick up the veteran and drive them to the van stop.
Figliuzzi said the veterans have to be able to transfer themselves, as the van is not handicapped accessible. They may also bring another rider with them, as long as they coordinate that with the DAV Transportation Coordinator, who determines whether the van is at full capacity. Figliuzzi said the St. Cloud VA Medical Center works with the DAV to coordinate appointments during van hours. Sawatzke said he would like to see the MOU before the 3-10-15 County Board meeting. Figliuzzi said that would be a good time to unveil the program to the public. Sawatzke said the newspaper may do
an announcement as well. Kelly said it could also be posted on the County web site. Aljets said a community meeting could be announced to gather volunteers.
1) The County to participate in the Volunteer Transportation Network program;
2) House the van outside at the Public Works site.
(End of 2-25-15 Ways & Means Committee Minutes)
Kelly requested the Board reschedule the 3-25-15 Committee Meetings because the Negotiation Committee will be meeting that day. Sawatzke moved to reschedule the 3-25-15 Committee Meetings to 3-24-15. Committee Meetings are expected to start around 11:00 A.M., following the completion of the Board Meeting and into the early afternoon. There is also the possibility that a Committee Meeting may be scheduled prior to 9:00 A.M. The motion carried 5-0.
Advisory Committee/Advisory Board Updates
1. Sawatzke said at the Legislative Conference, pending legislation on sales tax and construction materials was discussed. The legislation would allow subcontractors to purchase supplies for a government project without paying sales tax. This would be easier than the County purchasing the supplies for the subcontractor. It could possibly prevent problems associated with responsibility for an unsatisfactory work product. Another part of this legislation has to do with not paying tax on snow plows.
2. Borrell stated the Fair Board placed concrete in their hoop building. They were able to obtain a $13,000 grant, and $10,000 of that grant will be toward the project. Borrell said he is passing the information along as the Fair Board agreed to inform the County Board when improvements are over a certain dollar threshold.
3. Husom attended a Safe Harbor Task Force Informational Meeting on 3-06-15.
3 D Specialties Inc $266.17
AAA Galvanizing Winsted 362.16
AGC Networks Inc 1,150.00
Albertville Body Shop Inc 4,969.15
American Planning Assoc. 495.00
Ameripride Services 126.19
ANCOM Communications Inc 276.38
Anoka Co. Fiscal Services 1,673.00
Anoka County Sheriff 23,399.93
APEC Industrial Sales/Serv 1,199.50
Aramark Services Inc 8,043.36
Barrett Decorating LLC 2,895.00
Beaudry Propane Inc 4,081.60
Black Box Resale Services 2,787.00
BP Amoco 398.34
Brock White Co LLC 27,632.00
Buffalo Auto Value 237.86
Buffalo Hospital 260.57
Buffalo/City of 63,952.45
Burdas Towing 371.00
CDW Government Inc 40,601.02
Cenex Fleetcard 872.97
Center Point Energy 2,952.37
Centra Sota Coop - Buffalo 20,478.11
Central MN Mental Health Ctr 523.70
Climate Air 2,423.89
CNH Ind. Cap. Productivity Plus 473.27
Compass Minerals America 44,091.52
Cottens Inc 1,266.65
Culligan of Buffalo 200.00
Databank IMX LLC 209.00
Dell Marketing LP 14,013.57
Design Elect. Inc-Cold Spring 260.00
Diamond Vogel 224.08
DS Solutions Inc 337.50
Dynamic Solutions Group Inc 400.00
Envirotech Services Inc 5,261.55
EPA Audio Visual Inc 305.00
Ernst Gen.l Construction Inc 2,775.00
Farm-rite Equipment Inc 263.05
FBI Leeda Inc 650.00
Glunz Constr. Septic Service 130.00
Granite Electronics 5,007.71
Granite Pest Control Services 203.45
Greene Espel PLLP 3,818.00
Hagen, Christensen & McIlwain Architects 27,471.46
Hanover/City of 1,226.40
Harris Computer Systems 18,049.69
Hillyard Inc - Minneapolis 1,259.62
Howard Lake/City of 966.71
Hr Specialist Employment Law 179.00
Impact Proven Solutions 35,576.16
Integrated Fire & Security 3,290.52
Interstate Automotive 375.00
Jeddeloh & Snyder PA 600.00
Jerrys Towing & Repair 160.00
Klatt True Value Electric 1,643.87
Konrad Material Sales LLC 7,128.00
Laplant Demo Inc 1,212.64
League of MN Cities 192.84
M & M Express Sales/Service 139.67
M-R Sign Company Inc 2,791.31
Marco Inc 4,624.67
Marysville Township 996.20
Menards - Buffalo 430.24
Mend Correctional Care 21,842.59
Milana P Tolins LLC 100.00
MN Area Assoc. of Realtors 1,404.00
MN Corrections Association 125.00
MN Counties Comp. Coop. 1,323.75
MN Co. Info. Tech Leadership 250.00
MN Department of Health 1,038.40
MN Monitoring Inc 12,185.00
MN Recreation & Park Ass’n 299.00
MN Sheriffs Association 195.00
MN Supreme Court 1,270.00
Mobil Satellite Technologies 959.88
Mora Psychological Services 1,750.00
Morries Parts & Service Group 393.07
MSC Industrial Supply Co 321.47
MSDSONLINE Inc 475.00
Mystic Lake Casino 737.46
Office Depot 5,047.97
Omni Rail Products Inc 9,718.00
Pakor Inc 249.59
Peterson’s Towing & Recovery 225.00
Plastocon Inc 973.37
Public Agency Training Council 695.00
Regents of the Univ. of MN 1,030.00
Rhodella Ness 205.00
Royal Tire Inc 258.40
RS Eden 2,203.28
Ryan Automotive 190.36
Safelite Fulfillment Inc 673.32
Shred Right 321.32
St Croix Recreation Co Inc 6,066.70
State Supply Co 115.08
Stockholm Township 416.40
Suburban Emerg. Assoc. PA 183.09
The Sign Man of MN Inc 443.00
Thrifty White Pharmacy 2,230.33
Tomar Electronics 20,280.00
Total Printing 170.00
Trimin Systems Inc 17,905.00
Truk-mate Toppers Inc 1,283.00
Unique Truck Equipment Inc 196.95
Waste Management of WI-MN 316.57
Waverly/City of 326.32
Westside Wholesale Tire 325.49
Wright County Highway Dept 3,047.76
Wright County Journal Press 530.01
Wright County Sheriff 393.47
Wright Hennepin Electric 1,151.30
Wurm/Mark and Debra 2,000.00
Wurm/Todd and Krista 2,000.00
Xcel Energy 237.94
Zee Medical Service 170.70
Zuercher Technologies 157,146.20
32 Payments less than $100 1,776.57
Final total $747,172.01
The meeting adjourned at 11 A.M.
Published in the Herald Journal March 30, 2015.