City of Watertown, SD 2022 City Council Meetings, 11 Jul 2022

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From YouTube: Special City Council Meeting - 7-11-2022

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Special City Council Meeting - 7-11-2022

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Call to order for a special session of the watertown city council for july 2, 11 2022, please rise while councilman shetty leads us in prayer.

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Heavenly father, we thank you for your your favor, your blessings over this community over the past hundred plus years, lord and and tonight, and today we're getting together to decide on on direction with some fight.

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You know financial decisions to be made, and so we just pray and ask your wisdom in this um that again just over this community, lord, that whatever decisions are made there, even if there's of course, different sides to it that ultimately, things will be handled within peace and just with mercy with each other, and that absolutely lord, that this is our desire, is to is to further this community in a better way.

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And so we just pray for the wisdom today here for all that are involved in this decision making in your name, we pray, amen.

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Finance officer bob zien welcome back and please take the role. Thank.

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You bueller danforth here pauline paulson.

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Quorum is established. Now is the time for public comments. If anyone is here who would like to speak upon something that is not on the agenda, now is your time to do so. I don't see anyone coming forward. So I'll close the public comments open it up for approval of the agenda. The chair will now entertain a motion. Maybe councilman buehler seconded by councilman bill hauer, all those in favor, please say aye aye, any posse, nay, motion carries regular agenda.

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Has one item: an approval of resolution, number 22-33 authorizing the issuance and making provisions for their payment sales, tax revenue, bonds, series, 2022 ice arena and public infrastructure for more information. Are we going to our city manager, mac all right.

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Thank you mayor. This is the bond that we've been discussing for quite some time now. It is in the amount of 10 million dollars over 30 years, similar to the bond we issued several months ago, we've shared quite a bit of financial information around this bond. We're happy to answer questions as they may come up during the public hearing or during council action.

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Thank you very much. I will open up a public hearing now if there is anyone who would like to comment upon this item now is your time to do so.

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See no public, no member of the public coming forward I'll close the public hearing open it up for council action. Is there a motion to approve the resolution so moved made by councilman tupper seconded by councilman vilhauer council? Now is the time for questions and or comments councilman danforth.

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um I just said talk to kristin here just a few minutes ago, but in my mind I got a couple questions.

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The city we have already committed 25 million dollars to the to the project, with the uh the balance of that coming from donor funds is what, where we're at today, and that gets us up to uh this 10 million dollar bond of gets us up to the 35 million.

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So a couple questions I have in that regard is if some of the alternates are selected, which would increase it potentially higher than the 35 or if costs come in, that puts us higher than 35, which the 10 million is to reiterate. Why we're doing this is to bridge the gap between construction time and when the donor dollars come in. So my question is in any case that drives it over the 35 million.

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How does that get funded? Where would that get funded from because we're doing 10 million right now? So where would those dollars come from? Because we don't know what I'll tell me we don't know what that's going to be necessarily so if mayor of kristen could maybe address that.

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Finance officer, bob zene or city manager, mack I'll leave it for either of you.

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Okay, so the biggest thing that we'll have to watch now as we go into that process, is any overage over the 35 million. We would have to use the reserves out of the capital improvement fund. The way that we could establish and and make that work is to essentially look at our 2023 budget as well as our 2024 budget. I know a lot of the worksheets were shown that shows what we we have to use and that's for the debt payments, so any of the excess that we have.

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That's where the council gets to determine what that use is for, and if we do have an overage, then that's where it would need to come from would be fun to 12 during the budget process.

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I would also just add that the alternates are just that we're bidding them out separately, because they're not essential to the project and they could be built at a later date. If dollars were to come in later. I can't imagine a scenario where we as staff would recommend approval of of bids plus the alternate if it were over uh the amount of money that we have allocated for this project.

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Follow-Up councilman.

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uh So, if, if that were to occur, the highest probability is we would not come back to the public with more bonding. Is that fair to say, correct or okay? That's what I'm saying. Okay! Thank you guys very much.

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Councilman vilhauer.

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uh Thank you mayor, uh I guess I'll address it, probably to our finance officer, bob zine. um I I see in the document that we've got that okay, first of all, sales tax revenue bond have to emphasize again. This does not increase people's property tax. On how many times we have to say that, but yet that message is still out there that it does. It does not.

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So you know I gotta make that comment uh and also this is, as we explained, thursday night, a a bridge loan, while our donate our our sponsorships donations come in okay, so we we hope to be paid. This is set up for a 30-year amortization period, but we do have the ability to pay this off early now. What's not attached, there is reference made to exhibit a which has the redemption dates. We don't have exhibit a so so how long I mean.

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Let's say that these these donations come in within you know, they're all in a couple years I mean, when is our earliest, that we can redeem these bonds.

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I think normally, and I don't think these would be any different. It's normally in the tenure you have, that ability to re, refinance them or refund them and call the bonds so anytime, within that next 10 years we would have that ability, but, like I said this resolution allows us to do it and then once we get through the rating and we get through the issuance is when we get the final information and I'd be happy to bring that back too.

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I mean: is there any, do we have any authority or power to shorten that redemption period if the cash flow is there to pay them off early.

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No once the resolution is passed and they're issued that's how the bonds are sold, so we have to stay within that window. I will say with the dollars that are coming in from the donations.

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I think that gets us that good five six years, that we need the other debt that we're looking at for the remainder really in that big worksheet, that we kind of keep showing it doesn't really challenge us on our fund 212. So a lot of times. It doesn't really make a lot of sense to call them or to pay them off our last bonds that we did for the wellness center. We we did have that opportunity to refinance them.

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We saved three million dollars on refinancing them, so that's always probably more what we look at than actually calling them and completely selling them off. So.

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Just looking at you know ability to save some interest there if, if the cash flow would allow it so appreciate your explanation, I do have a comment yet to maybe take some of the questions up.

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It's up to you.

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Any other questions councilman tupper. So when.

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Would we that we get? Let's say we pass this today, then we got 20 days before we do anything to to allow the voters to prefer this. When could we at the earliest lock in an interest rate? Can we work on that now or do we get away to that 20 days.

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So the process will be. We will wait till the 20 days once it has met that time. I will do a bond rating we'll get the bonds rated.

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This resolution allows the manager and the finance officer to once it passes, will work with colliers to get that interest rate. As long as it's within what this resolution states, the interest rate becomes locked in then, and then it's normally about, I think around three months for us to get everything finalized and get the cash. So.

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That was my question. We can lock in the rates.

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Once we get past this point, we'll do our bond rating and the rating is partly what gives us our interest rates, so the next step will actually be to for me to do the s p rating, okay,.

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Thank you, yeah.

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Thank you any further questions comments: councilman villarreal. Thank you.

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Mayor, I do have a comment. I guess the timing was rather fortuitous uh just this morning. I don't want to steal your no.

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Go ahead, your.

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Thunder uh finance officer bob zeem, but just this morning we got the the may sales tax numbers. You know those that sat through the presentation last week uh you know the the slot. The the spreadsheet that we're looking at is using a three percent uh growth factor for our sales tax revenue. Well, the may sales tax numbers were 14 percent over last year uh year to date were almost 11.

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The last 12 months were 10.75 percent last six months, 12 and a half percent, so obviously very favorable, compared to the three percent conservative rate uh that we're using in our in our projections.

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Thank you very much any further comments.

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Chair would like to just commend the council, the staff, the community, for getting behind this project. I know since I've become mayor, we have long identified that there are some big budget items that we're trying to tackle, and I've always told people we can choose to get nervous or we can choose to be excited and I've always encouraged everyone to be excited, because this is for the betterment of watertown.

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This is something that has been long identified as a need in the community, and we could look backwards and say we probably should have done it five ten five years ago, ten years ago, we probably should but there's no sense looking backwards, doesn't do any good to try to affix blame because blame doesn't help anybody but credit. There is more than enough credit to go around right now to everyone up here. Everyone on the staff, everyone in the community that has already pledged the dollars and we can be the people.

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We can be the time in the community that finally gets this done. No one has really debated the need for it. It's long been identified and we are finally getting to it. I want to make just a couple clear things clear. As councilman vilhauer said, this is not increasing anybody's taxes.

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Okay, these are sales tax revenue. It's money, that's already being collected by the city, we're just spending it in a different way than what we otherwise would have.

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The 10 million dollar bond is also it's best to look at it as city manager, mack explained it as a bridge loan. We already have eight million dollars pledged in donations.

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I know of at least one huge donation likely coming, and the word is that the enthusiasm around the project has been reinvigorated after the presentation last thursday. So more money is coming in, so this 10 million bond will be paid back by the donations.

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So hopefully, if all goes well, the city of watertown is really not even on the hook for this. There has been a comment about referring this to the voters I want to just you can do that, but I would urge caution. The city already has a 20 million bond and 5 million allocated.

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We heard in the presentation on thursday and keep in mind that money can only go to ice. We can't spend it anywhere else. We heard from our architect that we could possibly try to build an arena for under that, but we'd get a really really bad arena. We would get no return on investment and the bonus to the city of watertown would be minimal, at which point I think, the architect and our owner's rep both use the words at that point. Why would you even do it?

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So I just want to make that very clear. This is long identified as a need. It would hopefully invigorate the economy, development and sales tax. So I thank everyone for going through this. I know that we could have done it at a better time, but there's no better time than the present. So I want to thank everyone for all your hard work on this. Everyone and, let's go to a vote, see no further comments.

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The action is to approve the resolution. All those in favor, please say aye aye, any opposed, say, nay, motion carries. Is there any old business.

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Is there any new business? Are there any liaison member reports?

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Any announcements there's no need to go into executive session. With that the chair will entertain a motion to adjourn made by councilman danforth seconded by councilman tupper, all those in favor, please say: aye aye, any poseid, nay motion carries.