City bows out of joint public works building
Wanting to avoid a steep hike in city property taxes, the Detroit Lakes City Council opted to sacrifice more than $1 million in projected savings and bow out of a joint public works facility with Becker County.
The council voted 7-0 to notify Becker County that the city will not be pursuing a joint project. Aldermen G.L. Tucker and Dave Aune did not attend the special meeting on Thursday.
The city cost for the joint facility would have been about $5 million. The prestressed concrete building would have included an 8,800-square-foot mechanic’s shop, a wash bay with two automatic washers for large vehicles, a large heated garage and office space.
It would have been built on 20 acres of city-owned land just west of the DL Public Utilities site on North Tower Road.
But it would have meant a big levy hike for city residents.
To pay for it, the city would have had to put $750,000 down from the general fund, then float either a 20-year bond at an estimated 4.5 percent interest, or a 30-year bond at 4.8 percent.
To make the annual $340,000 payment on the 20-year bond, the city would have had to impose a 9.5 percent property tax levy hike.
It would have required a 7.8 percent levy hike to make the $280,000 annual payments on the 30-year bond.
Plus, levy hikes for any other projects the city needs to get done would have had to come on top of that.
The city and county will now pursue separate facilities. The county had planned to finish its new facility by next year, most likely on county-owned land off Highway 59 North near Seaberg Power Sports.
But those plans may now be placed on hold. Faced with the sudden need for more jail space, and for new buildings at the county transfer station, the county is stepping back and will take a fresh look at its overall capital improvement plans at its May 13 meeting, said County Administrator Jack Ingstad
The county has $3 million in reserves originally intended for the new public works facility. The rest would come from the county road fund, so no levy hike would likely be required for a new public works facility, if the county goes that route, he said.
The city and county would have saved at least 10 percent of the overall cost — or $1 million with a $10 million project —by sharing a facility, according to an architect’s report.
The city will now have to decide how best to meet the needs identified in the architect’s study.
Two options were explored at the special meeting Thursday.
The one that seemed to spark the most interest is for the city to build a new street department facility near the Public Utilities headquarters off North Tower Road — but to build it in stages.
The first $1.6 million stage would involve site preparation, and the construction of an 8,300-square-foot mechanic’s shop and two manual wash bays.
Financing would come from a $500,000 down payment from the general fund and either a 20-year loan at 4.5 percent or a 3-year loan at 4.8 percent.
The 20-year loan would require a levy hike of 2.5 percent to make the $90,000-a-year bond payment.
The 30-year loan would require a 2.2 percent levy hike to make the $80,000-per-year payments.
The city would then wait five to seven years for the tax base to grow sufficiently to handle the next $2.7 million stage — building 26,000-square-feet of heated garage, and 10,000 square feet of office and common use space. Building material would be metal, not prestressed concrete, giving the facility a shorter life expectancy.
This stage will require a levy hike of 4.5 to 5.5 percent, depending on several payment variables.
The last phase would be a $250,000, 10,000-square-foot cold storage building. The street department would then be able to consolidate its storage at the Tower Road site — it now stores items in a half-dozen locations.
The street department could also stay where it is on North Roosevelt Avenue, and expand by adding 1.2 acres of now-residential property to the west. That block of Andrews Avenue would then be closed.
That option is set at $2.2 million, including $500,000 for land acquisition and $1.5 million for a new mechanic’s shop and two manual wash bays.
That option would require a levy hike of 3 percent to 4.7 percent, depending on the length of the bond and size of the down payment from the general fund.
The council will explore those options and make a decision later.