Council OKs inter-fund loan to pay for City Hall

Scott Swanson

The City Council, meeting Tuesday, July 24, at its new chambers location, the Police Station community room, approved an inter-fund loan within the city’s budget to finance the new City Hall at 3225 Main St.

The council last year authorized the purchase of the former U.S. Forest Service building at that location, for $725,000, with plans to remodel it and turn it into a City Hall. The council has approved designs for the project and city staff said last week that they expect to receive bid documents and engineered plans soon, after which the city would issue a request for bid proposals.

Renovation costs are estimated at around $1.1 million.

Finance Director Brandon Neish told council members that the city has $360,000 in its Building Reserve Fund and the funding mechanism approved by councilors will make up the difference.

He offered eight options, ranging from going to voters for a general obligation bond to doing nothing and delaying the project.

“Our goal here is simply to present options to you,” City Manager Ray Towry told the council. “We want to move forward in the best interest of the community.”

Neish noted that the general obligation bond option could provide up to 30 years of “dedicated revenue stream” but would be “much more costly.”

Councilor Bob Briana asked Neish for guidance.

“What’s the cheapest? What would you personally recommend?

Neish said he preferred the inter-fund option because it uses current city resources and is an arrangement permitted under state law.

That was the option chosen by the council: an inter-fund loan, in which money from other city funds can be transferred to the building fund and, in this case, repaid over 10 years. Borrowed funds would be repaid at the current investment interest rate of 2.16 percent, totaling $91,953.91 in interest payments over 10 years, according to a staff report given the council.

Council members voted 5-2, with Mayor Greg Mahler, Susan Coleman, Diane Gerson, Lisa Gourley and Dave Trask for, and Briana and James Goble voting against.

In other action:

– Councilors directed city staff to pursue the possible acquisition of a parcel on Long Street immediately east of the Skate Park that is owned by Dollar General but is “unused,” according to a staff report.

Towry told the council that Dollar General purchased two pieces of property to construct its store, at 1937 Main St., and the parcel on Long Street is “excess.” The company has offered to “gift” the 8,945-square-foot property to the city, he said.

Jerry Sorte, city community and economic development director, said property is zoned for commercial use, “so you would have to consider the uses.”

Responding to questions from the council, he said staff would research the property’s tax status and would talk to the school district, which owns the skate park property, about the situation.

Councilors voted 6-0, with one abstention by Goble, who works for Dollar General and thus stated he had a conflict of interest, to pursue the opportunity.

– Unanimously approved the third reading of a new city ordinance containing text amendments that bring city codes into conformance with a new state law allowing small accessory dwellings in single-family housing zones, as well as church properties.

– Unanimously approved a request by the Spring Terrace Homeowners Association Neighborhood Watch group off 50th Avenue, to block off a portion of Mimosa Circle for a National Night Out ice cream social to be held from 6:30 to 9:30 p.m. Tuesday, Aug. 7.

– Reached an informal consensus, with formal consideration to be at the Aug. 7 meeting, on an 8 percent rate increase for Sweet Home Sanitation to cover increased costs of handling commingled recycling materials.

Company representatives, in previous appearances before the council over the past two months, have said trash collection costs have ballooned due to China’s ban on recycling materials it formerly accepted from U.S. companies, and it has created an “unbelievably difficult” situation for garbage haulers.

A year ago, Sweet Home Site Manager Scott Gagner wrote in a letter to the city that was presented to council members, Sweet Home Sanitation was paid approximately $30 per ton for mixed recycling. Following the China ban, exporters started charging more as material recovery facilities, where recycling is sorted and processed for shipment, slowed and they added personnel to improve quality.

He said that as of the end of May, his company was being charged “$84 per ton for the same material they paid us $30 per ton a year ago.”

With the costs of transportation and handling factored in, the costs per ton has risen 355 percent since 2017, he said.

Linn County commissioners approved an 8 percent rate increase for Sweet Home Sanitation’s rural customers on July 10.

City councilors Briana, Gerson and Goble met in a work session with Sweet Home Sanitation in July and settled on the 8 percent figure.

“We realized this is a bigger-than-Sweet-Home issue,” Goble told his fellow councilors at the July 24 meeting. “It’s a U.S., a worldwide issue.”

Brownsville and Halsey have decided to landfill their recycling, Gagner said in response to questions from the council. He said that, although the company could save money by landfilling, “I don’t see any saving as far as partnering” with those cities.

Gourley said she was concerned about making any long-term agreements, given the “volatility” of the issue.

“If this problem is resolved in six months, we’re still locked into this agreement for the following six months,” she said.

Gagner promised that he would return monthly to the council to report on developments in the market.

“If it starts to correct itself, we will start to adjust prices,” he said. “We could adjust this thing every quarter if we need to. We don’t want to be unfair or unreasonable.”

Gerson asked if the council could make a decision that night, but Towry said the issue was not on the agenda as an action item and would need to be.

Gagner asked if there was consensus on 8 percent and Towry, eyeing the council, said there was.