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Council agreement on Wastewater financing package will save taxpayers $670,000

Jason Lombard, an employee with S.R. Weidema, cuts the last piece of a concrete pipe Tuesday for Willmar's new interceptor sewer line. Sewer foreman Mark Schauer says the project is about a year ahead of schedule. Tribune photo by Gary Miller

WILLMAR -- A financing package approved by the Willmar City Council for the wastewater treatment project will save taxpayers approximately $670,000.

The savings were estimated by the Minnesota Public Facility Authority under the financing package approved by the council Monday. The package was recommended to the council by the Finance Committee. City Administrator Michael Schmit said the city months ago entered into a financing arrangement with the authority for the full amount of the financing for the $86.2 million wastewater treatment project.

"And as we've gone along, anytime we've received any low- or non-interest loans or grants, we've been able to reduce that loan amount,'' Schmit said.

This particular financing mechanism is designed to pay for the two pump stations associated with the force main part of the project at a cost of $2,235,898. Of that amount, $447,197 will be in the form of a forgivable loan, leaving $1,788,716 to be financed as a 20-year general obligation wastewater revenue note at an interest rate of 2.457 percent.

This financing package includes funds from the Federal American Recovery and Reinvestment Act.

Because the city is entering into a new agreement, Schmit said the city's bond counsel advised the city to go through an ordinance and resolution process as was done on the original financing package.

After holding a public hearing, the council adopted the ordinance authorizing the issuance of the $1.7 million general obligation wastewater revenue note and the forgivable loan, and approved a resolution accepting the authority's offer to buy the revenue note.

In other wastewater project business, the council approved five unanticipated allowances recommended by project consultant Donohue and Associates in the $49.1 million contract for construction of the plant itself. Three allowances added $48,067.23 to the contract, while two allowances credited $17,177.95, leaving a total of $30,889.28.

A $500,000 fund in the contract covers unanticipated changes in specifications and equipment, according to John Bryant, resident project representative in the Willmar office of Donohue and Associates.

"It's a tool you have built into the project budget that's awarded instead of doing a change order,'' Bryant said in an interview. "The affect is the exact same.''

Other unanticipated allowances have also been covered. So far, allowances have totaled $184,657.95, leaving a balance of $315,342.05. Any unspent allowance will be deducted from the contract and will go back to the city, according to Bryant.

In related business, the council approved a $7,097.60 change order in the interceptor and force main contract with S.R. Weidema to pay for construction of two farm field access drives on County Road 55, located just south of the interceptor-force main corridor.

The new access drives were requested by Kvam Farms and will replace two drives that are too close to the corridor for farm equipment to operator. Kandiyohi County has approved a driveway permit.

Also, the council approved four leases at $1 each for the remainder of 2009 on land over the sewer line corridor between County Road 116 and County Road 55. The leases will allow farmers to work the soil in anticipation of the 2010 growing season. Without the leases, the city would have been required to plant a cover crop.

In other action, the council:

? Approved a request from Koosman Land Company of Willmar to rezone two lots in Terraplane Addition on Oxford Drive Southeast from general business to medium-density multiple family for development of apartments.

? Accepted a second $250 donation from UNICEL (Rural Cellular Corporation) to be received by the Fire Department.

? Approved final payment of $50,547 to Duininck Inc. of Prinsburg for construction of Fifth Street Southeast (mall road). The payment includes an $11,885.79 change order to reflect the cost of two additional catch basins, some pipe needed to match the mall parking lot, and additional aggregate and bituminous, bringing the total contract to $755,452.89.

? Received a legislative report on the state budget deficit and unallotment of Local Government Aid from attorney Bradley Peterson with Flaherty & Hood of St. Paul. The law firm lobbies state lawmakers in support of LGA on behalf of the Coalition of Greater Minnesota Cities. Willmar is one of 77 coalition members.

David Little
David Little covers the Willmar City Council, Willmar Municipal Utilities and other city news.
(320) 235-1150