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Northfield's public safety building still under debate

The mayor says bonds were sold for the new building last week and there's no turning back.

September 25, 2012 at 10:04PM

Northfield's long-debated new public safety building continues to generate controversy as it lumbers through a complex and unusual financing plan toward design approval and construction.

City Council candidates are lambasting incumbents who approved unusual lease-purchase financing that circumvents voter approval.

Candidate David Ludescher, an attorney, has repeatedly threatened a lawsuit to get a referendum, but then put legal action on hold. Another resident is collecting signatures on a petition asking for a public vote on the $7.28 million center.

But no voter referendum will happen, said Mayor Mary Rossing. She said bonds have been sold and the council this month voiced agreement on moving forward with design plans so bids can be let by early spring.

"The train has left the station," Rossing said.

The council gave final approval to the lease-purchase financing by a 5-to-1 vote Aug. 28, with Rhonda Pownell dissenting and Suzie Nakazian absent, said administrator Tim Madigan.

He said the city is paying $622,000 for a four-acre lot about a mile south of downtown on Hwy. 3 at Riverview Drive for a building to house police and fire offices and training space.

Finance director Kathleen McBride confirmed that remaining bonds for the project were bought last week by underwriter Dougherty & Co. of Minneapolis. She said Dougherty had sold about $3 million worth of bonds to financial institutions and others in August and the firm bought the rest itself for later resale. Only $6.28 million in bonds was sold, McBride said, because the council had voted to use $1 million of city reserves for the project.

The city will make semi-annual payments to U.S. Bank, which services the debt, McBride said. The bonds include no money for repairs to the 42-year-old public safety building, which will continue to house the fire department.

Rossing said the council has to decide what to do about new department facilities, but for now, most fire equipment will remain in the old building.

She said it's the first time Northfield has used such a debt instrument, but the city hospital and school district have used lease-purchase bonds.

Council candidate Ludescher said the city may be violating state statutes by using lease-purchase financing for a capital project without letting residents vote on it. He said he could find no Minnesota cities that have used the lease financing, which essentially is capital improvement bonds.

The city opted not to use two other common types of bonds, general obligation bonds and capital improvement bonds. The former type requires a voter referendum, and the latter allows voters to petition for a referendum. There's no built-in mechanism for a referendum with lease-purchase financing.

"Voters' rights are being taken away and the [city] government is overstepping their bounds," Ludescher said.

He noted the city has agreed to make lease payments on the new building for 20 years and then would own it. The state law allowing lease-purchase financing states that "the city, county, town or school district must have the right to terminate a lease-purchase agreement at the end of any fiscal year."

Ludescher said that means future city councils could terminate the lease agreement. He noted that three of the five council members who approved the financing are not running for re-election this fall.

Rossing, who is not seeking re-election, concedes that future council support could waver, but she said not making future bond payments would be disastrous for Northfield's AA- credit rating.

"I can't imagine that happening," she said. "That puts every future city project -- roads and infrastructure -- in jeopardy."

Replacing the old public safety building, occasionally flooded by the nearby Cannon River, was an issue when Rossing took office four years ago, and she said it was her top priority.

"We have done everything that people asked us to do," she said. "It was delayed three years ago because citizens were opposed to the scale of the project. The councillors listened and scaled back the project from a combined facility costing $10.9 million. There was a lot of opposition to that, so now we are just doing the police facility. We had a task force look at reuse of the old building. Another task force looked at all the possible [new building] sites."

She said holding a November referendum on the center financing would not have allowed enough time to solicit bids for construction next spring.

"The project simply needs to move ahead," she said.

Jim Adams • 952-746-3283