Buying, bonding and billing, Rockford Council faces big changes

The Rockford City Council took action at its June 10 meeting following a lengthy work session that addressed re-establishing a TIF district for recently purchased property, the sale of Water and Sewer Revenue Bonds to fund major improvement projects and adjusting water and sewer rates to meet the needs of those funds.

TIF

The city of Rockford recently closed on the property known as the Rockford Mall and is planning to make improvements that would provide multiple uses and attract additional tenants. A portion of the building is slated for an event center and the potential site of future city offices. In 2004, Welsh Companies, which owned the property at the time, made its own improvements, which generated additional property taxes.

For this reason, tax increment financing was established for the mall. A redevelopment TIF, as was the case with the 2004 improvements, allows the property owner to capture a portion of city, county and school district taxes generated as a result of the increase in market value for a designated period. Councilors, as well as staff, felt that this would apply to the city’s situation with the mall and its intended improvements. Shannon Sweeney of David Drown Associates, the city’s financial adviser, was in attendance to go over the specifics, which included the call for a public hearing. The cost associated with this proposed action is approximately $7,500 and includes an inspection.

The council voted 4-0 to call a public hearing on Tuesday, July 8, to establish a redevelopment TIF district for Rockford Mall.

WATER & SEWER BONDS

Sweeney also presented to the council bids for the sale of $4.795 million in General Obligation Water and Sewer Bonds. The bonding is being used to fund two large city projects: one regarding the city’s sanitary water system with the Minnesota Pollution Control Agency mandates and time line, and one overhauling deteriorating water and sewer mains in the city.

Sweeney told the council that the bids were more favorable to the city than originally projected and that the size attracted additional interest as well as the state of Minnesota Credit Enhancement Rating of AA Plus/Stable the city purchased in the process. This rating program, he said, incurred a cost to the city of $500 but resulted in a lower interest offering and an additional $70,000 that will be put into the city’s debt service account and used to make the initial payment, buying some time in debt repayment.

Sweeney recommended the council proceed with the sale to Sterne, Agee and Leach Inc. for $4.795 million in bonds at the rate of 2.77 percent, which it accepted and approved 4-0.

WATER AND SANITARY SEWER RATE ADJUSTMENTS

Rockford City Administrator Dan Madsen updated the council on water and sanitary sewer rates in the city. This had been a topic of previous meetings and workshops.

The city’s utility fund, Madsen explained, has been operating in a negative cash balance for the last few years. This, coupled the projects and subsequent debt service, requires the council to address and adjust user rates. This disparity has, in previous discussions, been noted by Sweeney as well as the auditor, Madsen stated, before making the following recommendations:

–A base fee of $4.95 per user for water, with a rate adjustment from $3.34 to $5.54 per 1,000 gallons.

–A base fee of $4.95 per user for wastewater service with a rate adjustment from $5.40 to $7.45 per 1,000 gallons.

–Elimination of the mandatory 3,000 gallon minimum (users pay only for what they use).

–Elimination of averaging sewer use fees during the winter based on water consumption, which had resulted in billing inequities.

The combined impact of a 2,000 gallon user is an estimated monthly billing increase of $10.81. Madsen said that controlling water consumption would result in lower billing, and a special meter can be purchased for the summer months for outdoor watering that would not be used to determine wastewater rates.

Rockford Mayor Renee Hafften reminded the council that the city’s rates were considerably lower than those for the same usage in neighboring communities and, in some cases, were nearly half.

The council approved, 4-0, the proposed ordinance amendments and rate adjustments effective for the July billing cycle following approval by the city’s legal counsel.

OTHER NEWS

Rockford Public Works employee Doug Duda was recognized by the mayor and council for 15 years of service. Duda began his career with the city in 1999 and was put in charge of its wastewater treatment plant in 2011, receiving both his Class A and Bio-solids licenses and an award from the MPCA for compliance and no instances of violation in 2013. Duda has also been involved in the plant’s expansion.

Also, as landlords, the city is preparing to enter into a lease agreement with its first new tenant, Brenner Family Dental, which will occupy a 3,000-square-foot suite.

Then next regular meeting of the Rockford City Council is Tuesday, June 24, at 7 p.m. at the Rockford City Hall, 6031 Main St.

 

 

 

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