WILLMAR -- State officials might seek a new site for a 16-bed psychiatric hospital in Willmar after soil borings showed that the location may require costly corrections.
In the meantime, the Kandiyohi County and City of Willmar Economic Development Commission is moving forward on a bond sale to finance the $4.1 million project.
Members of the EDC joint powers board and operating board heard an update Thursday on the project. A meeting has been scheduled for Dec. 21 for the joint powers board.
The psychiatric hospital will replace beds being lost with the closing of Willmar Regional Treatment Center.
The partnership between the EDC and Department of Human Services calls for the EDC to finance and own the building and the state to operate the program.
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Steve Renquist, executive director of the EDC, said the Department of Human Services hasn't positively ruled out the original location at East Willmar Avenue and Seventh Street Southeast.
"We don't have anything definitive from the state of Minnesota," he told reporters Thursday.
Renquist said he was informed earlier this week that the state may be looking for another site.
Soil tests -- one of the contingencies of the purchase agreement for the land -- found that the Willmar Avenue site lacked compactible soil. Correcting it will mean excavating seven feet or more of topsoil and bringing in new dirt to underlie the building's foundation.
It's not clear how much this might add to the project's overall cost.
Preliminary estimates have suggested "a huge range," Renquist said. "The minimum figure is not inconsequential."
The site has already drawn some fire from the public and from some Willmar City Council and Kandiyohi County Board members. At $394,000, it was the most expensive of some 20 sites that were evaluated by officials with the Minnesota Department of Human Services.
State officials preferred it, however, because of its access to transportation, main highways and other health services.
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Renquist said there are other sites available and that the EDC will continue working with the state to resolve the issue.
"They know we're doing what we can," he said.
The Economic Development Commission also is moving forward on financing the project.
The agency plans to issue $4.1 million worth of revenue bonds under the Kandiyohi County and city of Willmar tax-exempt authority. Each government entity has a $10 million ceiling on its authority to issue tax-exempt bonds during the calendar year, however.
The city is close to its limit and the county is looking at a major crossover refinancing in January for its new law enforcement center.
Renquist and county officials will explore the feasibility of issuing the bonds under Kandiyohi County's tax-exempt authority before the end of 2006.
It's also possible that the EDC could borrow a prorated share of tax-exempt authority from other cities in Kandiyohi County or from neighboring counties, Renquist said.
The alternative is to issue the bonds as taxable, which could cost more in interest rates.
