Financing the Safety Center – taking the next steps – UPDATED

UPDATE: Mayor Rossing has a column in the Northfield News on this topic.

On June 5, the Council voted to use lease revenue bonds to finance the Public Safety Center, an action which generated much quiet support for acting to move the project ahead directly and efficiently plus a little public outrage from the same small group of Council watchers.

Between June 5 and Tuesday’s special meeting, city staff recommended the HRA rather than the EDA be asked to issue of the debt and the HRA has received an introduction to the project.  Both the EDA and HRA have the requisite authority to undertake this transaction, so the choice is more related to which group is best able to do the job we’re asking them to do. The EDA has new leadership and is rebuilding, but is still short two members and quorum issues are still very real.

Northfield’s HRA has been quietly effective for many years; the HRA’s ability to work collaboratively and finish projects is significant. Dayna Norvold, HRA member, spoke at the meeting and said this request would “totally hijack our agenda” but she gave no specifics to explain her fear. In fact, the HRA board function will be to review materials and take action at the appropriate points in the process.  The work of drafting documents, preparing materials, etc. will fall to city staff, bond counsel and financial advisors.  The programs of the HRA will continue unaffected, their budget untapped and their ability to carry out their fine (award-winning!) work on housing issues in Northfield uninterrupted.  The Council is asking the HRA to let us tap into their financing authority, as do non-profits in town, but not to take over the project.  The burden to the HRA is small.

So, the Council took three more actions to advance the project; all votes were unanimous (6-0; Erica Zweifel was not present).  We approved the form of an RFP for the negotiated sale of bonds, a resolution to transfer funds internally for cash for the purchase of property and other items, and to authorize staff to proceed on closing on the purchase of the Cowles property (the City had a purchase agreement contingent on financing method) in conjunction with the bond sale.

Is this the right horse for our cart?

We were accused of putting the cart before the horse, but I think that metaphor does not capture the situation.  Right now, we’re deciding which horse to pull the wagon (we’re asking to use the HRA horse, a fine steed), what we need to put in the cart (cash for land purchase, plans, etc.) and when the two should be hitched (following HRA decisions, bond sale, etc.).  This project is complex – the multiple steps (which would be present with any financing mechanism, incidentally) must be correlated with particular transactions and decisions.  Coordinating action by the Council with action by the HRA with our respective meeting schedules, as well as making the decisions, negotiating the bond sale, purchasing the land will all happen at the appropriate time, but the truth is that many are executed by staff between meetings or by the HRA at separate meetings.  By having Council approval in hand, the other decisions can be scheduled and made efficiently.

We got more good news from our financial advisor (Mark Apfelbacher of Ehlers) – because this project is for an essential facility and because we are putting dollars in upfront to purchase the land, the debt issuance costs are likely to be lower because, even if lease revenue bonds are not backed by the full faith and credit of the city, this project already has city commitment and the risk that Northfield would not pay its debt is very low.  Combine that with historically low interest rates and this project is a good deal now.

My opponent has accused the city of “not having the courage” to do the project ourselves. Again, the complain is misplaced.  The City is doing the project and (see above) requesting the HRA assist us as the financing conduit; we’re not transferring responsibility for the project or the debt payment to any other group, but will be making an annual appropriation for payment from property taxes.  The only lack of courage I see was the original compromise on CIP bonds – a choice which I think says the Council has believed all along that this was not a project to send to the voters, but were not bold enough to act to use lease revenue bonds at that time.  Now that we have made more decisions about the project – location, scope, carved off the fire organization and vehicle location – we could and did make the clear financing policy decision.

See also: Council’s statement on the choice of financing method (I’m working to make sure this is the first of a series of statements to the public to clarify decisions and push information to residents, rather than rely only on media coverage).

2 thoughts on “Financing the Safety Center – taking the next steps – UPDATED

  1. Pingback: Public Safety Center financing – live blogging the HRA meeting | Betsey Buckheit

  2. Pingback: Budget thoughts | Betsey Buckheit

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