Grand Marais city councilors met in a work session October 14 to discuss their options regarding refinancing of $1.6 million in general obligation bonds the city issued in 2007 to provide infrastructure improvements for the Cedar Grove Business Park. After considering options on various terms — 10, 15 or 20 years — councilors voted during their regular meeting to authorize the city’s financial advisors to proceed with preparation of the paperwork in anticipation of a November 18 bond sale.
Mayor Sue Hakes explained that the city issued the $1,630,000 General Obligation Temporary Improvement Bonds in January 2007 to pay for sewer, water and street infrastructure in the business park. The plan was for the Cook County-Grand Marais Economic Development Authority (EDA), which is developing the business park, to sell the lots and repay the city $60,000 for each lot sold until the debt was repaid. However, the lots have not sold as planned and the EDA is not able to repay its debt.
Hakes said the three-year Temporary Improvement Bond is due in January, and the city is responsible for the payment.
City Administrator Mike Roth explained that council met in August with its bond counsel, Ehlers & Associates, and decided then not to sell another temporary bond. However, the city hopes to include a “call feature” in the new bond so that it can be called in early without penalty in the event the lots sell and the EDA is able to pay off its debt sooner than the bond term. Caroline Drude of Ehlers & Associates explained the call feature, saying it would allow the bonds to be paid off ahead of schedule without penalty, or to refinance if the rates were better. “It’s not something you deal with every day,” she said, adding that some buyers may prefer longer terms, but told councilors, “Flexibility to you is important. With a call feature, it’s entirely at your option to call or when.”
Roth said with a 10-year option, the city would pay the least interest overall, but it would be a “difficult pill to swallow,” especially without additional lot sales.
By way of comparison, Drude presented debt service schedules showing yearly payments of about $206,000 for a 10-year term; $150,000 for a 15-year term; and $130,000 over 20 years.
Roth recommended extending the loan period out as long as possible to give the economy time to recover, and a new marketing plan for the 34 lots a chance to work. “We should use every tool we have to keep the payments low.” Roth also said he wouldn’t advise using any of the city’s reserves to help the situation, and said there was little choice other than to use property taxes.
Councilor Tim Kennedy agreed, pointing out that there’s a good chance the economy will turn around. “We need to give ourselves time to deal with this,” he said. “Conditions may be far different five years from now…but the bottom line is that we’re going to be committing city tax dollars to get out of this.”
In other business:
» A request for a variance by Alyssa and Jonathan Hedstrom
from the 50-foot setback requirement on their East Third Street property was approved. Alyssa Hedstrom said the approval will allow construction of an addition to the south
and west side of their dental office, and will greatly improve
accessibility. “It’s a needed change,” she said.
» C ouncil reviewed a sign maintenance agreement submitted
by the Arrowhead Regional Development Commission (ARDC) for the newly placed rock cairn scenic byway signs. Councilor Kennedy asked why council was seeing the agreement for the first time, after the signs have already been placed, and wondered, “What if we don’t sign this?” In fact, City Attorney Chris Hood advised council not to sign the agreement in its present form because it doesn’t specifically limit the city’s liability to the two signs within the city limits. The document will be sent back unsigned to ARDC for amendment. As written, the agreement calls for the city “to provide for the proper maintenance of and keep in repair the cairn signs without cost or expense to the state or ARDC. Maintenance and repair includes, but is not limited to, graffiti removal and surface repair, and any other maintenance
activities necessary to perpetuate the cairn signs in
a safe, usable and aesthetically acceptable condition.”
» C ouncil approved expenditure of $6,857.50 to replace the
liquor store’s sign and awning, which were torn off the
municipal building during the September 28 windstorm.
» T he owners of the Shoreline Motel sign, located at the traffic
light on the highway, will be notified by letter to remove or repair the badly-damaged structure within 30 days, or enforcement action will be taken. A permit has been issued for a new sign, but to date the deteriorating metal sign has not been taken down. Roth said the city’s ordinance states that the sign must be kept in a “safe condition.” Councilors agreed that something must be done before somebody is hurt or killed by the falling pieces.
ouncilor Jan Sivertson reported that she has been working with the Cook County Events and Visitors Bureau to plan a holiday promotion in the downtown holiday district, and asked if the city would be willing to participate. Council agreed to consider assistance in the form of providing electricity for a lighting display in Harbor Park, and possibly putting up a large Christmas tree.
Sivertson also raised the need for construction of public restrooms downtown. “It’s an idea that keeps coming up,” she said. Mayor Hakes said she has also heard similar requests. The Lions Club and GMATA are scheduled to appear before council to make a formal request October 28.
ouncilor and library board member Kay Costello reported that the library has begun its strategic planning, with two full-day sessions planned.
ouncilor and park board member Bill Lenz reported that revenue figures for the park showed an increase for pool, campground and marina use, but a decrease for the golf course, probably due to the weather. Lenz also said the park board voted to purchase “flow developers” to prevent ice damage in the marina by moving water around. The flow developers will cost about $3,010 to buy, but are still less expensive than removing the docks in the fall and putting them back in in the spring.
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