City approves expense for subdivision

Authorization for an additional expense to complete the electrical infrastructure for the St. Joseph Subdivision, and approval of structures into the demolition program were part of the agenda at the city commission meeting on Wednesday evening, March 6.
By a vote of 4-0 – commissioner Chuck Lambertz was absent from the meeting – commissioners approved the Capital Improvement Plan (CIP) allocation for the mill and overlay of Archer Street from 12th to 18th Streets to the Special Highway Fund and reallocated this CIP amount for the underground electrical infrastructure at St. Joseph Subdivision.
In December 2023, the city commission issued temporary notes and approved the bid of Vogts Parga Construction for the construction of the public infrastructure to serve the St. Joseph Subdivision. On February 15, 2024, the city learned an additional cost would be incurred to provide electrical service to this residential subdivision. A deposit must be made prior to work being done, and a portion is refundable. No other private utility has requested a cash investment from the city for their capital improvement to provide service to the lots in the St. Joseph Subdivision.
The infrastructure design for the St. Joseph Subdivision included underground electrical service to all lots, although this was not included as a plat covenant. The cost to install this underground electrical service is $139,271. The cost to provide overhead electrical service to all lots is $55,890.
Since February 15, city staff has visited with Prairie Land Electric Cooperative (PLE) staff regarding options to reduce this unplanned expense. Options discussed include obtaining a cost estimate from Vogts Parga for trenching and underground conduit installation to determine whether any savings can be garnered from parceling this segment of the project out and requesting special consideration to obtain the deposit refund in full and up front. The current PLE policy is that a $3,000 per home refund may be issued at the time a home is connected to the electrical system for homes completed within five years. This is an estimated $48,000 refund. The PLE Board of Directors will need to approve this request, and they will meet on March 26.
Another option is to use the line extension contract offered by PLE. Members can finance line extensions over five years with an estimated 7.05% interest rate. City staff has not yet confirmed if this is an allowable option for a municipality. This project is not eligible for PLE’s Revolving Loan Fund.
City manager Amy Lange reported that Vogts Parga is progressing quickly with grading, and anticipates utility construction (water and sewer) to begin within the next couple of weeks, weather permitting. They will be ready for electrical, communications, and natural gas work to begin shortly after that. Therefore, materials need to be ordered soon.
City staff and PLE believed the best course of action was to obtain authorization from the city commission to proceed with the work and to continue the evaluation of the options listed above.
To fund this upfront unplanned expense, the city had the following options: move the CIP allocation for the mill and overlay of Archer from 12th to 18th Street to the Special Highway Fund and reallocate this CIP amount for the electrical infrastructure at St. Joseph Subdivision, or fund the electrical infrastructure for the St. Joseph Subdivision from Reserves.
Options also exist to recover a portion or all of this expense. The city could assign a special assessment to each lot, but the intention of this housing project is to provide homes affordable to moderate-income earners, which included an intention to not assign special assessments to these lots. 
Another option is to include this expense in the bonds that are issued after the completion of the public infrastructure. Temporary notes were issued to provide the city flexibility in the amount issued, which are then to be converted to general obligation bonds. These bonds are to be repaid through the use of the RHID. Whatever amount is not covered by the RHID is the responsibility of the city at large. The city maintained bonding capacity after some debt service dropped off recently in anticipation of this housing subdivision project. 
In other action, commissioners approved an application from David Sprague to have three trailer houses at 1915 Broadway Street entered into the demolition program, and authorized city manager Amy Lange to sign a contract with the owner, based on the lowest demolition bid of $9,000 from Dalton Dirt Works.
The trailer houses were on the condemnation list for July 5, 2023. Soon thereafter, it was purchased by Sprague with the intent of repurposing the property into a travel trailer park.
With the three trailer houses demolished, three additional trailer houses would remain on the property. One is being dismantled and removed by Sprague and the other two were recently inhabited and there has been some interest shown by potential buyers for these two. The trailer houses may be sold and moved off the property and out of town.
Under the demolition reimbursement program, the city does not solicit sealed bids. The owner is required to bring in two bids from two different contractors and city policy pays the reimbursement based on the lowest of the two bids. The city will reimburse the owner 50% of the lowest bid, up to $4,000.
Sprague solicited his own bids, and Dalton Dirt Works was the low bidder at $9,000.
With no further items on the agenda, the meeting adjourned at 6:04 p.m.