by ADAM GRUENEWALD
Cologne City Council members reviewed their current financial situation and also approved a key water project during their regular meeting on Monday, July 21.
With Mayor Matt Lein absent in Germany, council members unanimously approved a bid of $684,960.20 from Chanhassen-based Minger Construction Inc.
The lone bid came in 22 percent higher than the expected $560,000 estimate for the project and brings the total cost of the project to $785,000. The project will be supported by a low interest Public Facilities Authority loan that could save the city as much as $100,000 over a 20-year loan according to Jake Saulsbury of Bolton and Menk.
Saulsbury said the higher bid was impacted by heavier contract workload and a new permit requirement by MnDOT for a casing pipe under Highway 212.
“It wasn’t all that surprising,” said Saulsbury of the high bid. “It’s a common theme in other projects in the area.”
The higher bid ups the total project cost to $785,000 as annual bond payments rise from $34,000 to $48,000.
As reported previously the project would help to eliminate the two separate systems for water and replace an aging water main.
A new main would be larger and also connect with the County 36 water main line, which would be replaced up to Paul Avenue, creating two connections.
The other facet of the project is the replacement of an older main along Lake Street that is wearing out and has had four water main breaks in the last four years.
While council members considered rebidding the project and delaying the project to next year, Saulsbury said that bids are not expected to change. Factors influencing the bids include weather, labor force, a strong housing market and even larger projects in the area including the Mall of America expansion and the new Vikings stadium.
“There doesn’t appear to be a change in the bidding climate in the short term after talking with local contractors,” he said.
Responding to more questions from council members, Saulsbury stressed the project’s importance and the potential for additional permits.
“The danger of waiting is you’re left with a system with poor fire flows on the south side of town, you’d have to reapply for permits,” he said. “We have those five permits in hand and would have to go through that process again. You’d potentially run into a problem there.”
In other news, the council talked with Cologne Academy Executive Director Lynn Gluck Peterson regarding conduit bonding for another expansion project for the school.
Peterson said the funds would be used for phase five of the school which includes an addition onto the middle school as well as a theater/gymnasium complex. A bond sale could be held as soon as October for between $11.5 and $13 million in bonds.
While the city would not be putting forth direct funds into the project, the conduit bonding process would enable Cologne Academy to pursue loan funds at a lower rate.
“In the charter school world we are not allowed to levy taxpayer dollars,” she said. “In order to continue with our building projections we need to figure out a way to finance.”
Peterson added that conduit bonding is a “common practice” for charter schools in Minnesota to acquire funds. Classical Academy in St. Paul and Stride Academy in St. Cloud are among the schools who have recently done conduit bonding with cities.
A potential snag in the funding is the city’s tax exempt limit of $10 million, which would limit them in terms of unforseen projects and bonds.
City Administrator John Hendel said the city has not done conduit bonding before and they have several options in terms of potential charging Cologne Academy.
“We do not have a fee identified for these types of bonding issues with outside organizations,” he said. “It goes anywhere to not charging, to maybe covering out of pocket costs to covering out of pocket costs plus a .5 to 1 percent of the bonds.”
Representatives from Piper Jaffary will likely be at the next meeting to review the conduit bonding plan in greater detail.
Council members also received a grant for the Cologne Fire Department from Center Point Energy, considered investing in a hotel feasibility study through Hospitality Marketers International for the city and heard from Eide Bailly on the city’s 2013-14 audit.
The Cologne City Council will next meet on Monday, Aug. 18 at 6:30 p.m.
Contact Adam Gruenewald at firstname.lastname@example.org.