City finance committee hears funding options

The city of Glencoe’s finance committee invited Paul Donna from Robert W. Baird & Co. to discuss funding options for street improvement projects at its Sept. 28 meeting.
Issuing general obligation bonds, under the guidelines of Minnesota Statute 429, has been utilized by the city of Glencoe since the 1960s.
Donna explained the use of Statute 429 funding allows the city to borrow money for projects at a very low interest rate, but the statute requires a minimum of 20 percent to be assessed to the property owners affected by the project.
In using this funding source, the city pays 80 percent of a project through general obligation bonds and funds from the general, water and sewer funds. The remaining 20 percent is funded by assessments.
Donna and Short Elliott Hendrickson (SEH) engineer John Rodeberg explained that the majority of  cities in the state use Statute 429 financing, many assessing  up to 50 percent.
There are cities, such as Elk River, Apple Valley and New Prague, which are not currently using Statute 429 funding, but which have experienced great population and economic growth, which has generated new tax revenue that is being used.
Council Member Al Robeck suggested the city slow down on the projects and save up to do the projects and not assess residents.
Donna also explained that there are other ways to fund projects. The city could levy all or part of a project in a year. Raising the general levy by $1 million to put into savings to be able to do a project every five or six years would increase the levy by around 65 percent.
The city has been conscious of keeping the levy almost flat for many years.
The city could also add taxes or fees to utilities, gas, and/or be more aggressive on increasing utility rates each year.

For more, see the Oct. 5 print edition of The Chronicle.