09-20-2022 Special MeetingSeptember 20, 2022
A special meeting of the Scandia City Council was held on the above date with modifications.
The meeting was conducted in-person at the Scandia Community Center and over an electronic
platform. All participants who joined the meeting remotely could hear each other and contribute
to discussions.
Mayor Christine Maefsky called the meeting to order at 6:03 p.m. The following were in
attendance: Council members Heather Benson, Jerry Cusick, Steve Kronmiller, Patti Ray, and
Mayor Christine Maefsky. Staff present: City Administrator Ken Cammilleri, Fire Chief Mike
Hinz, Public Works Director Charles Fischer, and City Treasurer Colleen Firkus.
DISCUSSION AND POSSIBLE CONSIDERATION OF BONDING AND BUDGET
IMPLICATIONS WITH EHLERS FINANCIAL ADVISORY CONSULTANT
Jason Aarsvold, Ehlers Public Finance Advisors, reviewed the City's Financial Management
Plan from April 2021 and how its implementation would affect property tax levies into the
future. This multi-year fiscal plan integrates existing debt, capital improvement plans, future
debt, tax base growth, future operating expenses and staff, and maintaining a General Fund
balance of 60% of subsequent year's expenditures. From 2021 to 2026 the city has identified
$8,631,000 in Capital Improvements. Three ways to fund those Capital Improvements are: 1)
Fund operations, debt and capital with all cash, no new debt, by adjusting the levy for funding
needs and saving up for future projects, 2) Use a combination of cash and debt financing -about
36% funded through bonding, and 3) Maintain a `no tax impact' levy. The first scenario would
have the highest 5 -year average impact on tax levy projected at $88.46 on a median value home.
The second option is estimated to increase taxes by $33.98, and the third no tax impact being the
goal. The first "Pay as your go" model uses up existing cash and reserves and makes it difficult
to save enough for desired improvements, as well as those who paid in earlier to save for a later
project may not benefit from the improvement. The second model utilizing debt preserves
existing cash and resources, the cost of the asset is amortized over its useful life, the asset is paid
for and benefited by the user, and it helps the city manage and stabilize tax rates and user fees.
The third model requires significant cuts in capital expenditures and spending down fund
balances.
The Debt issuance planning and authorization process can take 6 weeks to 6 months or longer
with the rest of the process moving more rapidly with sales of bonds taking about 2 months and 2
to 4 weeks for closing from the sale date. The City enjoys a high credit rating of AA+ and its
projects are straight forward. Borrowing options include Negotiated Underwriting where the city
works with a Municipal Advisor to select an underwriter, Competitive Underwriting where the
sale is awarded to the lowest cost proposal, and Direct Placement which is good for smaller
projects with lower costs but not as competitive interest rates.
Council discussed taking out a large bond now to cover more projects in less time. Engineer
Goodman cautions that too large of a project ($3-$4 million) will limit available contractors and
produce less competitive bids. The City will have one bond left at the end of 2022 with a
balance of $3,075,000 paid out through 2026. Interest rates and inflation of construction costs
should be factored into implementing a capital expenditure plan more than issuance costs.
Engineer Goodman also recommended spreading out road reconstruction projects as that will
Scandia City Council Special Meeting
September 20, 2022
Page 2 of 2
spread out the cost of future maintenance, and future reconstruction. Scandia had big gap in its
road projects schedule (2007-2015) with 2018 being the latest road project in which $3.8 million
was borrowed. Councilmember Ray asked about possible Federal money becoming available for
roads. Aarsvold cautioned the city to not plan on that as nothing has been defined. Ray suggested
the city have a road maintenance fund to save for future maintenance. Administrator Cammilleri
said the city has a fund but it does not have an adequate balance. Capital fund balance has been
spent down due to the internet expansion project not being in the long-range capital plan.
Administrator Cammilleri's Proposed 2023 Budget reflects a $3.3 million bond to cover road
projects, equipment purchases and sewer nitrate project through 2026. Further budget
discussions will be help with the Council in upcoming meetings.
ADJOURNMENT
Kronmiller, second by Benson, moved to adjourn the meeting. Motion carried 4-0.
The meeting adjourned at 6:56 p.m.
Respectfully submitted,
Colleen Firkus
Treasurer