RIVER FALLS — City Council gave a unanimous thumbs-up Tuesday night, April 28, for the sale of up to $6.25 million in general obligation bonds to fund the new police station, replace a fire engine and refinance some existing debt.
The estimated cost to taxpayers to pay back the bonds is $381,000 per year over a 20-year term beginning in 2021, according to a memo from Finance Director Sarah Karlsson. Though At-Large Alderperson Scott Morrissette put forward an amendment to pay the fire truck off five years earlier -- a change estimated to save about $28,000 in interest costs.
The city historically has financed fire department equipment over 10-year terms.
General obligation bonds are a common way for municipalities to pay for building projects or other big purchases. Local governments sell the bonds to investors and typically pay off the debt through property taxes.
Here’s a breakdown of what the bonds will cover:
The resolution approved Tuesday authorizes up to $3.08 million for building renovations to the planned police station on Prairie Drive in the River Falls Industrial Park on the northern end of the city. The new station will occupy the building that once housed the Star-Observer and former River Falls Journal newsroom. The city purchased the building from RiverTown Multimedia’s parent company and closed on the property in January 2019.
The bonds also will go toward refinancing the initial $1.5 million purchase of the building.
City Council in February approved a bid of $2.33 million from Eau Claire-based Dell Construction Co. to convert the building into a police station. The total cost of the project is authorized up to $4.5 million.
The city will finance $665,000 for a new fire engine to replace the 31-year-old Engine 7. The truck was ordered from Pierce Manufacturing in November 2019 and is now being built.
Bonding for the fire engine purchase at the same time as the police station project should yield a lower interest rate for the city, according to a staff report.
Sterling Ponds refinancing
The bond sale also will allow the city to refinance existing debt from a State Trust Fund loan used to connect city water, sewer and storm systems to the Sterling Ponds corporate park off Highway 35 and Radio Road.
The city still owed more than $900,000 with a 3.5% interest rate over 12 years on the loan. Refinancing the debt as part of the bond sale will save the city around $72,000 in interest costs.
The actual financing for the projects may come in lower than $6.25 million, but can’t be higher without a new vote by the council.
The police station renovation and fire engine purchase were included in the 2020-2024 fiscal plan presented to the council in summer 2019.
The bond sale is scheduled to open June 9, with the results going before the council for approval that evening.