City OKs $1 million bond issue for pipeline

Other cities may

want to buy gas from New Ulm when

pipeline is complete

By RON LARSEN

Journal Staff Writer

NEW ULM -- The New Ulm City Council Tuesday approved a $1 million bond issue to build New Ulm Public Utilities' 4.6-mile supply pipeline that will tap into the Hutchinson Utilities' pipeline west of town.

Acting on the advice of its bonding consultant, the council moved to take advantage of the low bond rates that will help the NUPU conserve its available cash reserves.

In a meeting preceding the council session, the Public Utilities Commission recommended approval to the bond issue, which will be done in conjunction with the sale of $4,755,000 in general obligation WTS revenue refunding bonds, Series 2003C that also was approved by the council.

The second issue is to refund $4,681,801 general obligation wastewater treatment revenue bonds, Series 1995.

Jeanne F. Vanda, managing director, Public Financial Management, Des Moines, Iowa, told the commission and the council that she "was interested in conserving the utility's cash," and issuing the bonds to build the supply pipeline made "economic sense."

She pointed to an estimated $200,000 in revenues the utility would get when it gets contracts from other communities wanting to buy gas from NUPU.

Utilities Director Gary Gleisner said he could not reveal who those cities might be until contracts are signed.

Vanda and the commission agreed the biggest financial benefit would be in the savings in transportation charges that NUPU now has to pay its current supplier, Northern Natural Gas.

City Manager Brian Gramentz told the council that, "Over the years, our costs should be static for the next 20 years (with the pipeline) so we won't be subject to whims of the provider, in this case Northern Natural Gas, in pipeline carrying costs."

Vanda told the council the city would save "conservatively $197,000 over the term of the refunded bonds because of the lower interest rates."

Development contract

An ordinance bringing the Sunset Properties parcel into the city re-zoned residential received its second reading and was approved by the council. It will become effective 30 days after publication.

However, the city's development contract with Welcome To Our Home, LLC, developer of the parcel, has yet to be approved, and that issue was a concern for the firm's attorney, John H. Schnobrich of Redwood Falls.

After City Attorney Hugh Nierengarten informed the council that there were calculations to be made for the contract and that a public hearing on assessment of two parcels not included in the annexation would have to be held Oct. 7, Schnobrich urged the council to provide a solution which would allow his client to get some development work done yet this fall.

"While the contract can't be signed until after the hearing is held, the developer certainly is free to start work now. The only problem would be if this council is replaced before Oct. 7 and the contract isn't approved," Nierengarten said.

"I hadn't thought of that approach," Schnobrich responded. "I'll recommend that to my client. I just hope that you all remain healthy and on the council until that contract is signed."

Beacon Promotions

Time also was of the essence for Beacon Promotions, Inc., New Ulm's newest industry. One of the firm's owners, Kevin Poirier, was on hand as the council debated authorizing a $180,000 loan to help the firm make an acquisition.

It boiled down to a discussion of minimizing the risk the city would be taking in making the loan. However, Poirier told the council that closing date for the acquisition is a week from Thursday, and he needed to know at least two days before that. So, the council carried the matter over to an adjourned meeting time of 6:30 p.m. Tuesday, Sept. 23.

Library elevators

The council also authorized application for a Public Library Building Accessibility Matching Grant totaling $150,000. Gramentz outlined plans for installing a handicap-accessible elevator between the public library and the old public library building.

Councilors approved paying Kagermeier Oleson Hobbie Architects, Inc., up to $3,660 to come up with an elevator project design and estimate.