County could issue bonds for MLC

College requests

$7.5 million

By KURT NESBITT

Journal Staff Writer

NEW ULM -- A portion of the improvements to the buildings and grounds at Martin Luther College could be paid for using tax-free bonds issued by Brown County.

County commissioners approved a set of guidelines for issuing private activity tax-exempt bonding Tuesday morning and tenatively scheduled a public hearing on the matter for August.

MLC just completed a maintenance building and a cafeteria and would likely use the $7.5 million it has requested from the county to refinance some of the debt on those buildings, according to MLC President Ted Olsen.

A formal application hasn't been submitted yet, but county officials expect one soon.

If MLC's application is approved by the commissioners, then Brown County would issue bonds in its own name to refinance the construction. However, MLC would bear the actual responsibility for paying down the debt.

Commissioners were told that the county won't be liable for any of the money and the bonds won't affect the county's credit rating. The bonds will be exempt from federal income tax because they were issued by the county for an economic development purpose, which Brown County has the power to do under state law.

According to Terri Heaton, senior vice president of Springsted Financial of St. Paul, the bonds will be earmarked so that none of the money will go towards paying for the chapel that the college plans to build.

Olsen said the college approached Brown County because the City of New Ulm was over the limit that it is allowed to lend.

County documents indicate MLC approached Brown County about issuing the bonds last spring. The county responded by appointing an ad hoc committee consisting of commissioners Donald Wellner and Richard Seeboth and County Administrator Chuck Enter to meet with MLC representatives and Springsted Financial Consultants to study the idea of conduit financing from an economic development perspective toward capital improvements at MLC.

Conduit financing is typically used by cities and is generally favored over tax-increment financing.

Counties can only issue such bonds if it is to an unincorporated part of the county or to a group like MLC that has a non-profit status and can't issue those bonds unless the city gives permission, which is the reason why cities typically use conduit financing more often than counties, said Jerry Gilligan, an attorney for Dorsey and Whitney in Minneapolis.

Olsen said the college's main goal is to prepare workers for the Wisconsin Evangelical Lutheran Synod's school system, most if not all of whom are trained in New Ulm. He also emphasized that MLC's facilities are often used for public events like concerts and sporting events and that MLC students provide the area with a workforce. He said the college first remodeled in 1995.

Currently, parts of MLC's Luther Student Center and a maintenance facility are under construction, as are a service yard, parking lots, tennis courts and a holding pond. In the future, the college plans to build a link between the Wittenberg Collegiate Center, the Luther Student Center and a chapel. It also plans to expand its cafeteria. A field house off Highland Avenue is proposed, according to the college's website. These projects could cause more than $27 million.

Olsen said the timeline will depend on available funding.

"This is one way we hope to keep down tuition," Olsen told the board, referring to the bond request.

Enter said that the college's formal application will include a complete list of construction projects. The public hearing will either be held on Aug. 17 or at any other commissioners' meeting within 60 days.

"Cities do this all the time, but this is new to us," said Enter.

In other business, the Brown County Board of Commissioners:

* Approved a conditional use permit for a demolition landfill in Home Township for five years.

* Approved a conditional use permit for a gravel mining operation in Milford Township for three years.

* Authorized the purchase of a $61,139 tandem snowplow truck for the Highway Department shop in Hanska.

* Denied a road closure request from MLC that would have closed Center Street from Monument Street to Garden Street for three hours in October.

* Renewed a cooperative purchasing with the Minnesota Department of Administration that will allow the county to purchase things like squadcars and highway equipment at state bid prices.

* Awarded a $1.393 million bid to Robert R. Schroeder Construction Inc. to replace the Cass Avenue bridge in Springfield. The old truss bridge will be replaced with a three-span concrete slab bridge 163 feet long, county documents say. The project will be paid for using federal funds, bridge bonds and money from the City of Springfield.