City Saves Taxpayers $102,422

As you know, the City has been exploring various ways to reduce expenditures to meet the expected Local Government Aid cuts. As part of this process, our Finance Committee researched the idea of refunding ("refinancing") our existing debt obligations and taking advantage of the current low interest rates.

At the March 11th Council meeting, we unanimously approved the Refunding of Bonds 2001 & 2002 (Resolution 09-07) if we could achieve at least a minimum of 3% savings. As we would find out this week, this resulted in two very good things for Byron.

Our Bond Rating Improved

In order to be considered for refunding, the City was required to have its bond rating re-evaluated by Standard & Poor's rating company out of Chicago. To explain further, a "bond rating" is similar to that of your personal credit score (FICO). The higher your bond rating, the easier it is for you to get financing and you also get the best rates.

In 2005, Byron received an A3 rating that we were pleased with. This week, we were informed that our new rating is AA+, which was not expected due to the economy and state cuts. Needless to say, we are thrilled to get this new rating which places us one step below Rochester- which is rated AAA. It is my understanding that AAA rating is not attainable for a city of our size, so we have essentially received the best bond rating available to us.

Refunding Process Was Completed

Armed with our excellent bond rating, we were poised to secure our refunding at a very good rate. Since our last council meeting, the rates dropped and we were able to refund our 2001 & 2002 Bonds at a savings of $102,422 over the life of the bonds. The bond re-payment schedules were not extended as part of this process and will still be paid off by January 2013.

I would like to commend our City Staff and Finance Director for the excellent work on this project. In these difficult economic times, a substantial savings such as this is a big win.

The Sports Dome

By now, you've probably heard about "The Dome" in Byron. Several weeks ago, City Council approved preliminary approval for the Sports Dome Project. This means that Council was interested enough in the project to authorize up to $2,000 to be spent in order to prepare a feasibility study and find answers to the remaining questions.

However, it is worth noting that approval came only after nearly an hour of intense questioning by nearly all members of the City Council. We had many questions and concerns for Mr. Colby, the developer proposing the project.

What is the Dome?

The dome is very large, consisting of enough space that two softball fields would be contained inside. The field could be modified to accommodate other sports, but the primary source of revenue (as proposed) would be softball leagues and tournaments. Attached to the dome (on one side) would be 2 restaurants to serve tournament players and their families. Imagine a two-story wall of glass on one side of the dome with restaurant seating over-looking the fields.

In addition to the dome and 2 restaurants, the project also consists of a year-round driving range and golf club assembly shop. They also plan to build a sports hostel (small rooms with bunk beds and common shower areas) to accommodate traveling teams. A larger hotel is planned for a future phase of the project.

Why did you vote for it?

First, let me stress that my vote was only for preliminary approval. The developer still needs to come back to City Council with answers to my questions in order to receive final approval on the project. Originally, this was scheduled to be on the agenda for 3/25/09, but I've heard they are not ready to present. The agenda for next week's meeting should be posted here sometime tomorrow (Friday).

As you probably know, I'm an entrepreneur. I enjoy taking calculated risks to grow if/when the opportunity makes sense. When presented with the dome opportunity, I was intrigued enough to at least have the rest of my questions answered to see how viable the project may be.

If successful, a project like this would bring additional jobs to our area. In addition, the steady flow of visitors to our town (for weekend tournaments) would bring an influx of revenue and eventually the need for a hotel. With Somerby hosting weddings almost every weekend during the summer, a hotel would definitely be an added benefit to the people who visit our town. A hotel creates additional jobs and additional tax revenue.

Additional revenue through this complex adds to our tax base. A larger tax base means we can spread the costs of much needed projects over a larger tax base. For me, that was worth spending some time to research the potential viability of the project before taking a negative position on the project.

What don't you like about it?

I've heard from many residents over the past two weeks and nearly every one of them has said the same thing.

It's Too Risky.

True, there is enormous risk in a project like this. After all, they are requesting that the city issue an appropriations bond for the construction of the dome. While the figures presented to Council show that the dome would have sufficient cash flow to cover the bond payments, it's still a risk. I understand that. If the dome doesn't bring in sufficient revenue to cover the costs (as projected, see Pages 34 & 35), we have to be able to cover the bond payments.

To be fair, keep in mind that the developer also has $6.5 million of his own money involved with the project (restaurants, roads, etc). They have a vested interest in the success of the dome, because without the teams playing in the dome there won't be patrons eating at his restaurants.

I can also assure you that I've made many phone calls trying to verify the revenue assumptions with highly educated people "in the know" about a dome such as this. All seemed to think it was "do-able" with the right management team in place. However, I have additional concerns on the expenditure side. Frankly, I don't think it's realistic to heat/cool a dome of this magnitude for only $25,000 per year. I would need written proof from the dome manufacturer and People's Coop before I'd feel comfortable with this figure.

So what happens now?

The Colby Group will need to come back before City Council and ask for final approval to begin the project. Based on the answers they provide, they may or may not receive enough votes to continue. With the amount of public outcry against this project, I'm not sure the community is ready to take on a project of this magnitude. Nor am I sure that the city should. As you know, I'm a pro-business guy, but I tend to draw the line when you start asking for government assistance. Generally speaking, if something is a really great idea you can usually find lots of people who are willing to fund your project (for a cut of the profits, of course).

Personally, Mr. Colby will have a hard time convincing me that this project will cash flow enough to cover the bond payments. Even if I feel comfortable that it will cash flow, there is still the underlying question of whether or not city should even be involved with it.

Your Thoughts?

I'm interested to hear your thoughts on this project, both positive and negative. Please leave your comment below. Alternatively, you can contact one of your City Council Members directly.



Disclaimer: Articles posted on ByronMNBlog.com are the opinions of Councilman Alan De Keyrel only and do not reflect the opinion of the Byron City Council or the City of Byron. The information provided is for educational purposes only and should not be deemed accurate until verified.

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2009 Street Projects

Last evening, Council unanimously approved approximately $800,000 in street improvements for the 2009 season. These capital improvements will address the issues for 50%-60% of the roads in Byron. The exact list of improvements will be finalized after a detailed analysis this spring. As you may know, the freezing/cooling process that occurs during the spring is very hard on our streets, and this may cause additional damage.

Can We Afford It?

As you are probably aware, there is no money in our 2009 budget to fund a project of this magnitude. This means that we would be bonding for the project with payments starting in 2011. However, it is my opinion that we have ignored our capital projects for too long and something must be done now before our roads deteriorate further. Proper maintenance of our roads adds longevity to our infrastructure, which will save the city money in the long run. In the future, I recommend that we strive to include a portion of our capital improvements in our annual budget so that bonding is not needed for regular maintenance.

What Will It Cost Me?

This is a big project and we'll need your help to make it possible. Therefore, 20% of the costs would be assessed to homeowners on the roads being improved with an overlay. On average, this would be $300 to $500 for each homeowner who receives an overlay on their road. No assessment is planned for those residents receiving only a seal coat on their road. If needed, you would have the option to spread the assessment cost over several years.

What's Included?

At this time, the project includes an overlay for at least 31 streets (31,474 feet) at a cost of approximately $708,000. In addition, the project includes a seal coating for 12 other streets (9,656 feet) at a cost of approximately $77,000. As I mentioned before, the exact list will be finalized after the spring thaw and a reassessment is completed. A complete list of the proposed streets to be improved can be found on Page 54 of this week's Council Packet.

Will you fix the Frontage Road?

As you can imagine, one of the most complained about streets in Byron is our Frontage Road. Due to years of adding new businesses along the Frontage Road, sewer and water lines have been dug across the road to tie into existing infrastructure. Over time, this has caused "swells" in the road which come and go with the freezing/thawing seasons. To completely fix the Frontage Road, a full reconstruction (base, curb, gutter, culverts, turn-lanes, etc) would be required at a cost of over $750,000. Considering that some of the Frontage Road may be re-aligned as further improvements are made to Hwy 14 (overpasses, entrance closures, etc), some feel it would be fiscally irresponsible to spend this much money on something that may be destroyed later.

Well, We Can't Just Ignore It?

At the Council Meeting on 3/11/09, I did recommend that we don't ignore the Frontage Road completely as part of this project and see what can be done to make this road respectable for several more years of use. In my opinion, the likelihood of an overpass coming to Byron in the next 5 years is very low. We simply can't wait (and do nothing) to the Frontage Road in the meantime. Our city engineer and Public Works Director have been challenged with coming up with a solution that will improve our Frontage Road in an affordable manner.

When Will Construction Start?

Here is the proposed timeline for the 2009 Street Project:

March 25: City Council accepts feasibility study, authorizes plans
April 22: WHKS, Inc. presents plans and specifications
May 13: Public hearing for assessing 20% of the project
June 10: City council awards contract to lowest bidder
June 29: Construction work begins
September: Construction work completed
October: Council authorizes the sale of bonds for the project

Comments?

If you have thoughts about the 2009 Street Project, please feel free to do so by leaving a comment on this website. Alternatively, you can contact your City Council Members directly.



Disclaimer: Articles posted on ByronMNBlog.com are the opinions of Councilman Alan De Keyrel only and do not reflect the opinion of the Byron City Council or the City of Byron. The information provided is for educational purposes only and should not be deemed accurate until verified.

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Government Transparency in Byron, MN

As of today, I've been a Councilman in Byron, MN for approximately 60 days. Up to this point, I've spent hundreds of hours learning, researching, and speaking with people who are involved with the decisions that run our great city.

Unfortunately, I have not received one call or email about any issue that I've been presented with thus far. I actually received more emails in the 60 days I ran for office than I've received since being in office. This seems wrong to me.

I'm sure that residents are talking about the decisions we're making each week. Each Tuesday, I run to my mailbox to grab the Byron Review and see how I was quoted at the previous meeting. It's a nerve racking experience for me as this is the only thing that residents "hear" each week.

I believe in government transparency and involvement by "the people". True, I may be the person who is representing you at city hall, but I should only be a reflection of those who put me into office. This means that I need to hear from you.

This blog will be a place where I can voice my opinion on matters and hopefully get feedback from you, "the people". I understand that you may not have time to attend each council meeting, but hopefully you have a couple hours each month to check this website and provide some feedback. If not, maybe forward this to someone who may find it interesting.

Each week, I'll be posting about an issue that you'll hopefully find important and relevant. The first post will come after tonight's council meeting (3/12/09).

Thanks!

Alan De Keyrel
Byron, MN Councilman