City issues $2.24 million in revenue bonds for safety building

Joel Stottrup / Union-Eagle The Princeton public safety building under consruction, as it looked last Thursday in a view at the south end looking north.
Joel Stottrup / Union-Eagle
The Princeton public safety building under consruction, as it looked last Thursday in a view at the south end looking north.

The city’s Economic Development Authority has issued $2.24 million in bonds to cover the costs of the city’s new public safety building under construction in the Aero Business Park west of town.
The EDA took the action Thursday, June 13. There will be $2.43 million in revenue generated from the bond sale when considering the intricacies of the bonding process. Because of interest rates favorable to the city, bond investors will pay an additional $21,000 for the bonds, city treasurer Steve Jackson explained.
Letting the bond proceeds sit in a bank drawing interest until they are used will bring in nearly $1,700. Also,the city is putting about $168,000 into an escrow fund to make sure the bond payments are made because they aren’t general obligation bonds.
The repayment schedule is for nearly 20 years, starting in 2015. The true interest rate is about 3.73 percent.
If the bonds are paid off according to the full schedule – meaning no refinancing or early payoff – the interest will total $1.01 million. Principal and interest would total $3.25 million.
The bonding will supply $2.18 million in revenue to construct and equip the public safety building, which will be the new home of the city police and fire stations. The main walls, made of prefabricated concrete panels, are up at the site.
Liquor store profit
City Council members, using projections from Jackson and city liquor manager Nancy Campbell, have expressed confidence that profit from the city’s liquor operation – the Princeton Wine & Spirits off-sale store – will be sufficient over time to repay the bonds. The revenue, in fact, has been climbing since Walmart opened last February. EDA Board Member Cindy Riddle asked the city’s bonding consultant, George Eilertson with Northland Securities, at the EDA meeting, if the $2.18 million in proceeds from the bonding will be enough to cover the cost of the public safety building. She noted that there had been discussions about all the costs including the needed computer equipment.
Jackson entered the discussion and said that the city will, “in the end, have to make it fit.” He also said the budget includes a contingency fund for unforeseen needs during construction.
Thom Walker, a member of the City Council who sits on the EDA Board, noted that the Fire Department has also built up money in a building-construction fund that could be used for project overruns.
EDA Board Member Mary Chapman asked Jackson if he had any idea of the council’s plans for using the present fire station once it is vacated.
Jackson answered that he didn’t think any formal decision had been made. But there had been much agreement that the city’s Public Works Department could use the building for keeping some of its equipment and also have its office there, Jackson added. The present public works office is small and cramped.
Chapman asked if, in the event the present fire station was sold, the proceeds could go toward paying off the loan for the safety building.
Jackson answered yes and said money from the sale could also be used to cover a shortfall should it develop in paying for the safety building.