Council sells bonds, starts rec trail work

Moody's downgrades city's Public

Utilities rating

By RON LARSEN

Journal Staff Writer

NEW ULM -- The City Council sold $5.7 million in public utilities bonds at a nice, low interest rate and launched work on the city's recreational trail by awarding Phase 1's $643,948 construction contract Tuesday night.

Cronin & Co., Inc. of Minneapolis corralled the $4,755,000 subordinated revenue refunding bonds, Series 2003C, issue with a low interest bid of 3.5623 percent.

Wachovia Bank, National Association of Charlotte, N.C., with a bid of 3.155 percent, edged out Cronin & Co., Inc., for the $1 million in general obligation bonds to fund the New Ulm Public Utilities' nearly 5-mile, supply pipeline connection with Hutchinson Utilities' natural gas pipeline.

"The low rates are a compliment to the city's conservative management," said Jeanne Vanda of Public Financial Management in Des Moines, Iowa. "The low rate came in spite of Moody's downgrading of the utility's Aa3 rating to A1, which is the same as the city's."

Vanda said the downgrading resulted from Moody's concern about NUPU buying electrical energy on the "spot" market rather than using its own generated power.

"Moody's has become very firm on this as a result of the major blackout experienced in the East. We tried all day to talk them out of downgrading it, but we weren't able to do it," she explained.

Councilor Clark Tuttle asked if it meant "a big difference" in the interest the city would have to pay.

"Not really," she replied. "That shows the confidence that Moody's has in the City of New Ulm that the bid rate was nearly the same as for a Aa3."

Recreation trail

M R Paving & Excavating, Inc., New Ulm, was awarded the contract for nearly 5 miles of bituminous trail that will generally parallel the Dakota, Minnesota & Eastern railroad tracks from KC Road across town to 20th South Street. The firm beat out three other bidders.

Easement

A request by Andy and Anna Leif to vacate a recreational easement that runs along the river through Riverview Estates was turned down by the council.

The Leifs had planned to buy a lot in the development, but they sought action from the city because they feared for the safety of their two children in the backyard area because of the easement.

"For what the city would have to pay for an easement now to put in a trail, the deal (which provided the city with the easement) was a very good one for the city," Council President Dan Beranek said.

City Attorney Hugh Nierengarten, in recommending against vacating the easement, said the Leifs would be able to erect a fence to keep people from crossing through their backyard. The fence could be left there until the city had a need to activate the easement.

"I'm not a gambler," Leif told the council, "so I guess we will have to look elsewhere to buy a lot."

Fire department

mutual aid

For the first time, as a result of council action, the city has a mutual aid agreement with the City of Madelia.

"This is basically to have an agreement in place in case of a situation which would involve FEMA (Federal Emergency Management Administration). There are situations where the city could lose out on federal funds without this agreement in place," City Manager Brian Gramentz told the council.

A lease between the city and the New Ulm Medical Center was approved by the council after the addition of a clause that would require the tenant to restore the leased area to its current condition if the lease is terminated. The center is expanding its parking into the city's storm water holding pond area off Garden Street.