Alright. Good evening, everybody. Before we call our meeting to order, just a quick reminder, if you haven't done so already, please sign in the back, legibly as your name and your attendance is a matter of public record. And with it being 06:00, we'll call our meeting to order and start with the pledge of allegiance. I pledge allegiance to the flag of The United States Of America and to the Republic for which it stands, one nation under God, indivisible, with liberty and justice for all. Roll call. Roll the horn, please. Bora here. Steichenbaum. Nash. And Olson.
With that, we have our agenda before us. I didn't see any additions or modifications. Motion to approve the agenda. Motion by Nash. Second. Second by Steichen. All those in favor, say aye. Aye. Opposed? Motion carries. Consent agenda is lengthy. Any questions, comments, concerns or considerations? Motion to approve the consent agenda. Hearing none, I have a motion by Nash. Perfect. I'll second. And a second by Borra. All those in favor, say aye. Aye. Opposed? Motion carries. With that, it does move us to number five. Peyton, we are at a public comment period.
Has there been any, specific request to speak before council this evening? None received. Alright. Just remember again, encourage the public to participate in the process, helps us make a little progress. And with that, we will move to number six. Tonight, we have, a twenty year service award and recognition for deputy clerk Becky Tighe from the city of Delworth. Peyton, I'll let you begin this one. Yes. Thank you, mayor. And I would like to invite deputy clerk Tighe up to the podium, please,
just so we can stand here and I'll stare at her as I talk about her here for just a moment and give her an opportunity to say a few words. So last week, Becky celebrated her twenty years of service with the city of Dilworth. So really cool. So not very often do we get to do a concurrent service award recognition as well as a retirement recognition. Becky's last day with us is this coming Friday, so we're incredibly sad to see her leave.
But she will be coming back on a part time capacity here for a few weeks helping us out, which just speaks to the individual that she is. She's under no obligation to do anything like that. Becky will not remember this, but when I accepted the job way back when years ago, twelve years ago, I remember just, going through that whole transitional phase, trying to, get situated here at the office and from Murray, Kentucky. It was the first time I called back up to City Hall,
and Becky was the person who answered the phone. And and you're still trying to remember names at at the time. Becky's name, I remember because I could see the image, you know, right when you walk in to City Hall up on her, window there into her office. And that's always that first image right when you make that left hand turn coming in from outside. You see that to the left over there, and that was the first image that I saw when I came to City Hall. She was the first person that came out to greet me that day. She's the first person to answer the phone that day and was so kind to
help me find a place to live, actually, when I first moved up here. So I'll always be grateful for that. And, you know, she always has that infectious smile that we're you know, that I'm sure she's displaying right now. I don't even have to look over there at her and that she would, display all the time, in and out. And so you you always need that level of care and sincerity, and that's who Becky is and who I've been able to experience, for the last twelve years. And, again,
it's just been amazing to watch her, continue to grow. You know, so, like, even this image right here, so you probably wonder where this is. So a lot of you never see this, but every election cycle comes around. And, we're there till 09:30, 10:00 at night, filing the final election results and everything. And what I was always just so taken with Becky well, I don't know if a lot of people remember this. While we're celebrating twenty years, Becky's only been a deputy clerk role now for is that thirteen years plus or
minus? Something like that. Yeah. So she and I basically start around the same time in our respective roles with the city. And so we had an opportunity to work and grow together, through all this and the level of care that she would always take, whether it be with elections, licensing, helping out our kids at the pool all the time, or, just any other else, mentoring or just, showing me the ropes. It was always done with such a genuineness that we could all,
you know, learn from here. And through it all, what I think I take most is just the level of growth that you have experienced ever since I've been here. And, you know, as, I guess, as a manager and just working together, that's the number one thing that you wanna see in individuals. It's just how they grow on a daily basis, year to year, month to month, whatever that may be. And as an employee, as a person, and just overall general, thoughtfulness and care and how the job is administered,
Becky was growing on a daily basis. And, you know, I couldn't be more proud of her. I tell her this all the time, and I'm just really, you know, just always taken with what she's brought to the table. Just always brought that, you know, that energy and color to city hall on a daily basis. And, it goes out saying, you know, we've always had a perfect team here. And the reason why we've been a perfect team is because of her. Thank you. And so, you know and and then lastly,
I'd be remiss if I didn't mention as part of my journey here in working with Becky, what I know she's most prideful about is her family and getting to share her stories about her grandchildren with me. That's really cool. I get to live that through her. And, you know, she brings them by from time to time, shows me pictures, and just incredibly proud of her. And we're all proud of her for, what she has become and continues to do in,
you know, for the in for the city of of Dilworth. And so I think we're all better people for knowing Becky, obviously. Not like you're going away or anything. It's not like you're dying here or something. But, but I know I'm a better person for for work with Becky for the last twelve years and very appreciative of you, and thank you for everything that you have taught me. So with that said, I guess the rest of the if anyone else would like to say anything or however you wanna do this. Follow-up, Julie. I do because I was on Becky's hiring committee.
And so if you can imagine that, we were I just remember, just getting to interview, and I remember advocating. I'm like, this is the person we need here. And I know they were like, she's so overqualified. She'll never stay. And here, twenty years later, and how much you benefited the city, I'm so excited that we chose you and that you chose us and that you have been here with us for twenty years. So congratulations on your retirement. Thank you. And I'll cry, so now Thank you, Julie. Council? Congrats, Becky.
Thank you. Yeah. Congrats. I am sad to see you go but happy, but you were leaving. Thank you. Thank you. Congrats. Same here. You're safe. Becky's always been very approachable and friendly and answer the questions that ever I've had. And, so I know you're huge have been a huge asset to the to the, city staff and to the community. So I hope you have many years of enjoyment with your five grandchildren. Yes. Oh, very nice. Well, Becky, twenty years.
Started when you were 22, 23. Yes. And I think about it and and because we're I joke because when when it was brought up at a, planning commission meeting, I was like, how did I forget that you were gonna be done? Because, honestly, this will sound bad, but for twenty years, council and as the mayor, I've kind of taken it for granted that Becky's always gonna be here. You walk in the door, you wanna crush anxiety, you got worries, you're, like, not sure as to what you're gonna do. Be a first term mayor with no clue, and, like, you're doing the diversion.
And, when you'd walk in, you'd turn that corner and go left into the office, and that used to be your desk. And every single day, Becky greet you with a smile. And it crushed all anxiety. It's like, okay. This is gonna work. We're gonna be okay. So I remember that. That's what I was and and I felt honored too because if I had questions as to where I needed to be or where I needed to go because oftentimes I didn't know, you took great care of me. And you took and you did the same thing for the city for twenty years. Peyton talked about watching you grow.
And as the city grew, you took that on. And over the last twenty years, what we were doing, you had your hands and you were instrumental in it from beginning to end. And and, again, I I took that took that for granted. We were definitely gonna, miss that. I'm gonna personally miss that. Peyton talks about how we're better people because we met you and I agree with that wholeheartedly. How you treated our customers, how you treated, our citizens, how you how you worked with, staff and and council, we're all better. We're Okay. I'm happy. She's got here. Yeah. Like, we got golf and grandkids in our future and all kinds of good stuff.
Yeah. But we are like well, it it's a better city. We're we're better public servants because we had the opportunity to work with you. And for that, I'll be grateful forever. You wanna do this now, or do you wanna give your speech now? How do you wanna do it? It's kinda your show. We're here for you. Thank you to everyone. I really appreciate your support all of these years. Just been so blessed to work with all of you for sure. And also Peyton has been so instrumental in teaching me so many great qualities as far as what makes our city special.
And that was always my biggest focal point is let's always try to make the city look as best as possible. And, you know, I I didn't want anybody to ever call in and and feel like they were ignored. So, you know, we always try to be, you know, the best that we can with our customers. Yeah. Sometimes you just can't make somebody happy, but that has always been the goal is to always make the city look really good. How much the city has grown over the past few years, especially, I think Peyton,
you know, just has been so great about moving us forward into the future. And I'm just so proud of having worked here or working here right now. And just, you know, I I really thank you guys all so much. I appreciate, you know, you guys having the confidence that I could do my job and that you didn't have to, worry about me ever not doing what, you know, always having the city's interests at at my heart. And I just I found this to be a job that I just I totally
loved. I know when I first started working here, I was like, oh my gosh. I am never gonna learn all of this stuff. There is just so much information that flows through. And my husband would say well, you know, you just started. Just, you know, take it easy. Just do what you can. And as time goes on, all of a sudden, we'd be walking around the city and I'd be talking to him about different things and he'd tell me that I needed to put on or take off my city hat because I wasn't working right now. And so it was just like,
you know, you start thinking about all of those things. Being involved with planning definitely helped me so much in all of the zoning things. And again, you know, Peyton Peyton just being so patient and just, you know, being such a good teacher and then having support staff like Angela and Jess has just really been awesome. So I thank you all so much. I'm going to miss it here, but, again, I'm gonna be around for part time for the next couple of months, so can help make things transition a little bit smoother.
And that'll help me too not have to wake up and go, now what do I do? Because I've just been this has been my life for so long. So, again, thank you all so much. I appreciate it. How do you wanna do this, Peyton, or do you wanna do this? Let's do let's do it here. I think they're better up here. Did you end up just a tish, Chad? There you go. Alright. Thank you, Peyton. Thank you, Angel, for adjusting for the shares. We move into number seven, finance. We have seven a. We have, the twenty twenty five audit report this evening. We had Eide Bailey presenting. And I always fun to talk about Monday or money on a Monday,
but it's Tuesday, but you know where we're going. Well, I can't say I followed something like that before. So, nothing like jumping from that into a into an audit report. So, I'll try my best to keep up. But, yes. My name is John Hagen. I have been with Eide Bailly, for over ten years now. I work a 100% in the government space. So cities, school districts, counties, some special utility framework districts. If it's government, you name it, I've touched it. Tonight we'll be going over the executive summary for the city of Dilworth, for the financial statement date of 12/31/2025. So there's a few years back or a few months back,
I should say, not years, months. So remember that we are a little bit into 2026 already. But, another caveat to note that the financial statements are not formally finalized quite yet. We've been working through some administrative items with Perry on the 34th Street project with City of Morehead. We do now have all the information we need to go final, so we will go finalize here in the next day or two. But, nothing you see tonight, none of the numbers that you see tonight should be impacted by any of that. So, everything you see tonight should be fully concrete at this point. So we will work through, the last few hoops here this week,
but I did wanna point that out. So we'll get right in, to the audit results. And the end goal of every single audit is to issue an audit opinion. So what does that mean? We, as auditors, come in through a series of tests and procedures, and ultimately include an audit opinion, which is management's responsibility for three things, that the financial statements are prepared in the proper framework or the proper accounting principles, which is US GAAP, that they are free from any material misstatements and that they are presented fairly. We do obtain reasonable but not absolute assurance on those three items and ultimately issue
that audit opinion, which is called an unmodified audit opinion, which effectively means a clean audit opinion or a clean bill of health. So end goal is exactly what you're going for at the at the beginning of the onset of every single audit. This year, we did have a secondary opinion that was applicable. So anytime an entity, typically federal or a local government, expends over a million dollars in federal dollars, it does trigger what's called a single audit or a specific set of tests more compliance driven over those federal dollars. Based on the city's output for FY '25 over those federal dollars,
it was at about 1,100,000, so you were just over that threshold. So we did, require to do some more compliance tests, associated with that. And the city did receive an unmodified opinion over those federal dollars as well. So again, clean bill of health, what you're going for at the beginning of each audit. With our audit opinion, we do communicate formal audit findings as they, are necessary. So there's kind of three different buckets of findings. The first one being your financial statements. First one, within the financial statements bucket is your segregation of duties. I know you guys have heard me say this before,
but it is simply, the size of the city of your finance office. It means you don't have enough hands or eyeballs on everything to properly segregate everything. Doesn't mean you're doing anything wrong with the personnel you have in place. It's just simply you're not quite big enough. So, very common for cities and entities of your guys' size. And then the next two findings are very similar. I'll lump them together. So preparation of financial statements, a lot as well as material journal entries. So the financial statements are getting longer and longer each year. I think for the city, you guys are over 80 pages now, so there's new audit standards requirements each year.
We're the kind of the, quote, unquote, experts in that where, you know, typical finance staff are maybe not in the weeds of those accounting standards as much. So parlaying that into preparing the financial statements to make sure that those are in the proper standards and stuff, so we are asked to do that by management. And when that happens, along with the journal entries associated with that, we do communicate and formalize these findings associated with it. So again, very, very common for entities of your guys' size and something that you guys have gotten in the past. And to be frank, I would expect these three findings to remain going forward unless you guys change significantly with with unless you guys,
change significantly with with personnel and just city growth. So it doesn't mean you're not growing because you definitely are, but you guys know that. So, second bucket is, any findings subject to the federal single audit that we completed this year. There were no findings associated with that. And then the third bucket is Minnesota legal compliance. So this is a separate set of kind of compliance driven procedures that we are required to do by the state of Minnesota. It's for all audits within the state of Minnesota on local governments. So we do a separate set on that and there were no findings associated with that in FY twenty five.
Okay, so now we'll get into some of the numbers behind the scenes within the financial statements. So, first slide we have here and this shows comparative data for the last ten years. This kinda show trend lines, all of our tables and graphs. We like to do that just so you guys can kinda visualize some of the numbers. The first one here we have is cash and investments. This is in thousands, so it's easy to forget that when you're looking at this. But, ending 2025, cash and investment balance is broken down between, two different types. So your governmental, that's gonna be your general fund, debt service, any capital project funds.
And then your business type funds are your kind of proprietary, your water, sewer, garbage, funds of those nature. So that's a the breakdown within the bar between the two different color codes. But overall, cash investment balance in your business type is just under $5,000,000 and then your governmental funds coming in about 13,600,000. One thing to quickly point out there, just for comparability purposes, we do exclude capital projects, specifically from this graph just because, depending on timing of bond issuances and how those projects are going can have significant
influxes or defluxes of cash. So we exclude those just for comparability purposes on that slide. So now we'll kind of focus in specifically on the general fund. This is the main operating fund for the city. The first slide we have is a budget to actual, comparison. There's a lot of information on here. I won't go into deep dive into too many of the numbers but high level, your first column being original budget followed by, your final budget. Third column is where the actual numbers came out for FY '25 and then the last column is your, just high level variance. So total revenues came in,
over budget. Typically governments, oftentimes budget conservatively, just inherent in nature, especially in the Midwest. But budgeting is not an exact science. So we look at this very high level, but overall revenues came in above, some additional grants, that were taken advantage of as well as the sales tax dollars. This is the first year you guys received those so it wasn't budgeted for. On the flip side from expenditures outflows, the expenditures did exceed your final budgeted but again kind of captured by those additional revenues, some additional grant dollars, things like that. So all in all,
after, factoring in some transfers and stuff, there was a net change or a net increase to fund balance of the general fund of about 36,000. So relatively flat, bringing your ending fund balance within the general fund specifically to about 5,700,000. So kind of scroll down there, the very ending number there is your ending fund balance. So, if you can kind of mentally circle that 5,700,000 we'll dive a little bit deeper into what that number means and represents here in the next couple slides. So fund balance and a positive fund balance, what does it do for the city?
First, it contributes to a favorable bond rating. So as you guys go out for additional bondings, for future projects or what it may be, in the future, you can get better rates for having additional fund balance or reserve set aside. Secondly, it produces investment income, so effectively having your money work for you in the bank is always a plus. And then thirdly and most importantly, it offers a cushion for unexpected expenditures or revenue shortfalls in the future. So, just like human nature, you'd always like to typically have more money in the bank than not. So, in general, fund balance correlates relatively well with with cash and investments.
There's some timing considerations with receivables and payables, but for the most part, fund balance is relatively equitable to cash. Pretty technical slide here as far as governmental accounting. I won't spend too much time, but there are different fund balance categories, depending on, you know, how those can be spent moving forward. So the first format, is non spendable. So this has already been spent in the form of inventory or prepaids. The second one is restricted. So this would be restricted for outside sources. If there's grant dollars that are restricted for specific uses, debt service funds are typically restricted, but restricted by outside parties and are legally restricted.
The next two committed and assigned are kinda internally earmarked at different thresholds, by you as counsel or by finance management for kind of earmarked for specific activities or projects down the road. These are not legally restricted. And then the last bucket is your unassigned. It's effectively everything that wasn't covered in your first four categories. Think of the the unassigned as kind of your rainy day fund or your everything bucket. So within the general fund fund balance, this kind of shows a breakdown of those different buckets. The two far and away, biggest areas or buckets that are applicable,
for the city. Smaller chunk is assigned for specific, portions. That was about 900,000. So that's assigned for things like park, fire department, transit. Again, internally earmarked by by you guys as a city. And then your unassigned bucket is kind of your unencumbered or rainy day funds of about $4,700,000 So that kind of shows a breakdown of that that 5.7 that I had you mentally kind of circle a few slides ago. So where should the city be? This is kind of the million dollar question. We get asked this quite often, you know, what reserve levels should cities be carrying?
Unfortunately, there is no perfect answer. There isn't a magical rule or golden rule out there. There are some different benchmarks that we like to to, you know, have you guys be aware of. First one is being the State Auditor's Office of Minnesota suggests about 35 to 50% of of operating funds are kind of annual expenditures sitting in that fund balance. GFOA is another national governmental, agency that benchmarks about five to 15% of operating expenses. And then the last benchmark, the city currently has a fund balance of about 50% goal of having that in
reserves as compared to the following year's budgeted expenditures. So again, that 5.7 stacking up against annual operating expenditures comes in about a 134%. So well over those kind of benchmarks that we had just mentioned. Again, no right or wrong. So what another way to look at that is the city could operate as is, on the kind of the current path of expenditures, within the general fund for about, sixteen months. So just under about a year and a half with no additional revenue coming in. So that's how I like to look at it.
I think it kinda helps make it a little bit easier to understand. But as you can see, you're well over those benchmarks and overall in the last ten years. You've always been over those that 100% and then under a 150, so kinda right in line with FY '25. It's right in the middle ground there. So Okay, so that that wraps up the general fund. Now we'll quickly cover a few of the other funds, for the city. First one being your debt service fund. So money set aside for the future repayment of bond and and other, debt obligations for the city. Typically property tax levies and special assessments are the revenue streams for those,
bond obligations or debt obligations, I should say. In FY '25 at year end, there was about 8,900,000 sitting in that fund balance. Again, some additional collections throughout the years built up as well as some transfers. Interest income can lead to that increased fund balance but ultimately that money is earmarked and legally obligated for future debt repayments. But overall, very healthy kind of reserves there. No concerns with any sort of, like, future issues or cash flow in any sort of those future debt payments. Okay. Now moving on to the next couple slides,
we'll cover more of the proprietary, the business type funds of the city. First one being specific to the water fund. So we have a couple different lines here, representing revenue, is actually the second line or the blue line. I know it gets kinda hard to see. The green line is your operating expenditures and the difference between the two is your operating income or loss for the year. So in FY '25, there was about a million dollars in operating expenses with about 950,000 in operating, revenue. So there was a small net loss typically. Most cities are kinda trying to,
make sure that the, water funds or other proprietary funds are self sufficient, but you're also not in the business of making a bunch of money and, you know, charging rates that you're collecting, well and above your means. So, most places operate right at about a break even, which is where the city's been over the last, I guess, ten years is right about right close to that line of zero as possible. And this doesn't also factor into some non operating items. You guys do have some, interest income and stuff to factor in. Sometimes grant money might trickle into some of those proprietary funds. This is strictly just from operations.
Once you factor in some of that non operating item, there actually was an increase, to net position or the equivalent of fund balance, for FY '25 within the water fund. So very similar or the exact same slide specific to the sewer fund. On the flip side, the sewer fund did have an operating gain this year, so revenues about 1,100,000 with expenditures of 900,000. So there was an operating gain of about 250,000. And then also factoring some of those non operating items like interest, income or interest expense,
grant money if needed or if applicable, there was additional about $30,000 associated with that. So again, pretty common to hover around or just above break even on some of these proprietary funds. So last one, not to be dead horse, I'll I'll kinda spin through this one quickly, but same exact slide associated with the refuse of the garbage fund. You guys contract out a lot of those expenses. So this is very much kind of streamlined as far as money coming in, money outflow. Operating revenue or gain this year of about 20,000, and then some non operating revenue about 10,000
as well. So, again, hovering right above or right at or just above breakeven. So on the flip side into the balance sheet kind of consideration, so as far as year end unrestricted cash and investments associated with water, sewer, and garbage, You can see here there are very healthy cash and investment balances associated with these funds. Again, a way to look at this is, you know, where does how far is that cash and investment balances, bring us as far as an annual operating, expenditures. So in the water fund, you have enough in just cash and investments to operate as is, for about one point eight years.
In sewer, it's a little bit more, about two point seven years. And then garbage is a little bit smaller for about six months. So all of that is just cash and investment sitting in the bank as as compared to kind of your annual operating expenditures. And that is actually the end of my slides. So, hopefully I didn't bore you guys to death. But before I go, any any questions? I know I covered a lot there, threw a lot at you. But anything you guys want me to dive in deeper or have specific questions on? Any questions from counsel? No questions from counsel? My only question is will we get a paper copy of the executive summary when
it's done? I usually look at the When we have finalized versions, you guys will get, formal final PDF versions of both this presentation as well as the full financial statements, so that full 80 pages, if you guys are interested in some some light reading on the weekends. But, if you do have questions when you get those, feel free to relay relay those through Perry, and we'll get back to you with whatever response or question you guys have. So, I appreciate you guys having me tonight. Special thank you to to Peyton and Perry and the rest of the finance team that helped us out. You guys are always really easy to work with. It's a pleasure coming out here.
We really appreciate the relationship we've had with you guys over the years. Perry and team makes our life pretty easy. Pretty easy even though we are pretty demanding. We ask a lot of questions. Emails. He's probably pretty happy to to get have us get out of his hair now for for the year, and he can fully focus on 2026. So it'd be nice to kinda put FY '25 financials behind him, but we we really do appreciate it. So thank you, guys. Thank you for coming out, John. Have a great good job. Thank you, guys. So with that, Peyton, you want us to receive and file the audit report? Yes, please. I will If there are no questions about the audit report,
I will entertain a motion to receive and file. Motion. And a motion by Kevin. Second. Second by Julie. All those in favor, say aye. Aye. Opposed? Motion carries. With that, brings us to number eight in the community center. Eight a, we have a public hearing on resolution twenty six twenty nine, resolution relating to the tax abatement hearing on general obligation sales tax and abatement bonds, granting the abatement and approving the issuance of bonds. A lot going on. And with it being, what, 06:35, we'll call the public hearing to order and start with staff presentation.
Peyton? I will actually yield my time to Nick Anhut with Ehlers to present on this. Thank you. Thank you. Mayor and members of the council, Nick Anhut with Ehlers and Associates. Been Been working with the city for a little over a dozen years, here, providing, kind of a third party financial, advising role to the city, in particular, the debt issuance. And so we're here to kinda discuss, tax abatement. I know you've used this program for economic development and, housing development projects. You can also use it to authorize bonds to pay for public facilities as well.
So that's what we're here to talk about tonight. I do have a presentation, that I'll run through quickly and and hopefully open the floor to questions as well. But essentially, tax abatement authority does allow Minnesota cities to apply their general obligation pledge towards financing for certain types of projects. So that general obligation pledge is kind of putting the city's full financial backing behind a debt instrument like a loan or a bond issue. It means that you're gonna use every resource that you have to to make the
repayment. And in exchange for that, the lenders or bondholders, are able to gauge their level of risk as low. And as a public entity, they're able to offer you very low interest rates or lower than maybe you'd otherwise receive with other kind kinds of security. So, the way the debt statutes are written up in Minnesota, you know, usually, you would need a approval of a referendum to authorize general obligation bonds unless there's a specific statutory exemption. And this tax abatement is one of those statutory exemptions that allows a counsel to
go ahead and apply that pledge. And so the purpose of an abatement, there are a number of things that you can finance, but, public facilities is one of them. And the council, in adopting an abatement, must find that it expects through that abatement that the benefit to the public will equal or exceed the cost associated with the debt and that it, the project itself will be in the public interest because it meets one of there are 10 actual qualifiers, but two of them are on the slide here. First and foremost, that you're using the abatement to construct or acquire a public facility and also that
you're providing access to services for residents. There are eight other types of uses. Economic development is one of them but these two meet the qualifications for the community center. It does require a public hearing with a notice that gets put into the paper. There are not any individual notices sent to the actual parcels that the abatement is derived from. It is purely the council's decision to choose how it's going to allocate tax, capacity towards, repaying the debt. So it does not impact any property's taxes any different from the others.
They still have to pay their taxes just like another property. It's really a choice that the city is making on how it's gonna allocate those resources. Once you take the revenue in, when you're talking about economic development, you're able to provide it back as a form of rebate perhaps to help incentivize building that project to begin with. But in this case, you're gonna take that levy and you're gonna apply it to the debt that's gonna be repaid. So, you can utilize an abatement for up to twenty years. That's the maximum term that is allowable under the statute.
And after adoption of the abatement proving that you've got that mechanism in place, then the council can have authority to issue bonds for the identified project. There are some limits on the next slide in terms of how much an abatement can be outstanding in any one given year, and it's based on the size of the tax base that you represent. So in any given year, the total of all abatements that have been granted, so not just for one particular project but all projects, cannot exceed 10 of the city's net tax capacity.
That's a measure that's used to value the size of the tax base you represent. In 2026, your tax capacity figure was $5,900,000 so 10% of that would be 592,185. There are some existing tax abatement, as I mentioned, the city has awarded to different types of, housing and economic development projects estimated around $472,000. So that would leave about 88% of your total capacity that is available to potentially use for other purposes such as the hearing that we're here tonight.
Next slide. And just let me interject right here. This is just something that we'll just have to continually monitor as we go along, just to make sure where our limit is and that we're not approaching it or going over it. On the proposed project, so you all have obviously gone through the process and awarded contracts for the construction design of this facility. Now we're here to finalize the financing of that facility. In total,
the construction is about $11,500,000 The sales tax authorization that was approved first from the legislature and then the voters here in the city did allow for a bond issuance to finance up to $5,400,000 of the construction expense for the facility. And so the abatement is going to bridge the difference or provide the additional amount to round out the full financing for the project. The parcels that were included in the hearing notice represent the capacity that's necessary to over twenty years to provide the repayment of those bonds.
They represent over actually in excess of 313,250 that's necessary to authorize the bonds. One other thing to note is that any properties that are included within an abatement cannot be within a tax increment financing district. So I mentioned there's a limitation on the previous slide. Another restriction is just monitoring going forward that the properties don't overlap or intersect with any tax increment financing districts. And as we mentioned already, twenty year max term. As far as the finance plan in particular,
we're estimating a bond issuance of $11,375,000 would be a combination of the sales tax as well as the abatement bonds in total to provide the funding for that project. About 5,100,000 of that amount would be debt repayable from the sales tax. The reason that's a little bit less than 5.4 is you've already got some cash on hand that's been used to pay some of the preliminary expenses. And so you don't need to bond for that full amount as some of that cash is available in lieu of bonding.
The remainder, as mentioned, is coming from the tax abatement, the subject of this public hearing. Ultimately that abatement is backed by the levy authority of the city and the special tax abatement levy that the city would use to repay that portion of the debt that size at $6,200,000 This is the restatement of the previous limitation when we look at the abatement that is proposed for this evening add that to the existing. You would have utilized $386,000 of that capacity within your annual limit.
That still leaves some remaining capacity to entertain this tool for other projects in the future, kind of as Peyton just alluded to, one of the things you'll monitor going forward. But just be advised that this $313,000 of that amount will be in place for the twenty years while this debt is outstanding or basically until it's repaid. But there is over 35% of your total capacity still available after that. Our estimates on looking at kinda where the market is at right now for interest rates. We are estimating about a 4.21
true interest cost on the combined amount, the full $11,000,000 worth of bonds. That's based again on observations that we've seen in the marketplace over this spring. We've also been conservative in these estimates. So they're actually 50 basis points or point five percentage point higher than what we actually think they would price at today if we were issuing these bonds. You know, we just wanna make sure that we're conservative when we're doing public hearings and things like that so we don't have to redo the proceedings in the future. So hopefully you'll be able to price it at better than that 4.21%
but that's the presale estimates that we'd put forward for this packet. The sales tax portion of the proposed bond issue as mentioned would be repaid solely from those sales tax receipts that you have in place already. The average annual debt service that ties to that interest rate is about $444,000 per year. As mentioned, you do have the sales tax already in place and nine months of collections indicate that it's reasonable to assume that you'd anticipate about a half $1,000,000
worth of annual sales tax collections over the term or a typical year. If we apply that half $1,000,000, that gives you a 112% coverage over that debt service amount that's already a conservative estimate. So we think that there is is available coverage. It's important to note though that sales tax will fluctuate with performance of the economy, local sales activity, and and things like that. So they can vary from year to year. But that does give you a little bit of a cushion, above the debt service payments so that we don't have to dip into other funds
to make up the difference. As I mentioned, these bonds would carry the general obligation pledge, which is ultimately you telling the bond holders that even if the sales tax doesn't come in at what it's anticipated, you're willing to dip into fund balance or some other source to make up the difference. The abatement portion would be repaid from the levy. There's a little more stability within that. That's something that you address every year in your truth in taxation process. That levy does need to be sized at 105% of the debt service expense. That's a statutory requirement for any levies. You're able to write down that levy if you you do wanna apply some reserves.
So I know that you've talked in in detail about applying some reserves to help offset that tax burden on a future basis, but this is kind of the the max amount that would be expected and in discussions each time you have your truth in taxation process. Again, these are based on conservative estimates, and we're hoping that that's gonna come in lower once we get to actually price and bid out the bonds. Which will lead me to the final slide, and you can get rid of me. The action tonight, obviously, is to hold a public hearing, invite public comment if there is any, and also allow the council to ask any questions on the financing.
As part of the resolution that's being proposed is also, the approval to move forward withholding a competitive sale of bonds, competitive meeting that we're going to help the city prepare an offering document, circulate that to the broader marketplace, and try to get the, lowest bids that we can from the the the bonding marketplace. So we'll send this out to national and local banks, broker dealers, and other types of investment firms to try to get the lowest potential proposal in terms of interest rates.
We'll collect those proposals on your behalf on the twenty second. So that's a a day of a council meeting. Those, proposals typically have a twenty four hour shelf life. The bond market likes to reprice itself on a daily basis. And so they'll give you a proposal, make it good for twenty four hours, and I'll come before you with the the bids that are in hand and the council will have the choice that evening whether or not to move forward and award the lowest bid on the basis of the lowest potential cost to the city. And if that goes forward and and we get successful pricing and and the bids
are awarded, we do anticipate closing on the financing within two to three weeks after that date. So in in the middle of July, we'll be able to close on it. That's when the bond purchaser or that bidder will, have to wire in the funds to the city accounts and then you'll have those funds available to pay the contractors that are working on the community center project. That concludes, any slides I have, but happy to address any of the questions and looking forward to working with the city on this, financing. Are there any questions for Nick? I feel like we just did this. Mr. Stecken? I just have a general question.
Looking the knowledge of the true interest cost is roughly 4.1 or 4.2. With 50 basis points question there. But what was it what is it what's the recent trend on that? Or going back a year, firewall or whatever? Going back a year. Actually, about this time last year, we saw a spike up. Things started to settle down in the market for the remainder of the year, and we've seen them rise again this spring. So I'm sure that's not any news to everyone. It's kind of a national interest.
There was some hopes that there'd be maybe some cuts to the Fed interest rate and things like that moving forward, but inflation seems to be sticking around. And so interest rates, unfortunately, are are higher than we thought they were, but they're actually pretty much in line if you give me a year. I'd say they're they're about the same as where they were this time a year ago. They just were are a little bit higher than maybe six months ago or or four months ago. And has their rating changed at all, since the last audit or since you worked with us before? Actually, the the city the last bond issue,
we actually got an upgrade in the city's credit rating. So, that was a a benefit. I've already built that into kind of the analysis for where these interest rates are. So the city previously had a double a minus rating, which is nothing to sneeze at. It's a very good rating, but you were upgraded in 2024 to a double a rating. So that's one notch higher. It's the third highest credit rating that, Standard and Poor's gives to cities. And we have included that already. It probably makes a point one to point one five
interest point difference in where you would price. So it's nothing to sneeze at, but it's good news. So that has been a positive trend. They have viewed the city of Dilworth and your growth and basically everything that you heard in that audit report, you know, strong fund balances and things like that, your credit metrics have been very solid for a number of years. So they saw the need to upgrade you then. Thank you. Ben, is that is there anything else from the staff report? No. We're all good. Well, actually, the last thing I will mention is that at the next meeting I think I put in your staff report already.
It was, like, two or three months ago after we got back to bids, I gave the council an idea of what the levy would look like over the next few years, slowly integrating it in, I think increasing it by like $40,000 or 1% plus or minus in there on an annual basis. That is practically the same number that we've received thus far with this preliminary report. So we'll see once those numbers come back here in about a month where we stand by anticipated still being on target with what we originally talked about. Thank you. And if there's nothing else from the staff report,
we can ask if there's anyone to speak, for or against, I guess, the bond bond issuance or the information providers, they own Speak, to this issue, either in the audience or online, in all means and all modes. With there no one here to speak this evening, we'll close the public hearing, and I guess we'll close the public hearing at 06:52 and council discussion. Questions from council? I have time. Kevin? Thank you, Nick, for coming in. Explain this to me as if I were five. What what's the draw to do an abatement bond rather than just,
like, a traditional loan bond. Right? Like, the I I followed it for a while, but then I kinda fell off. And maybe it's a poorly asked question. But Like the GO? Like the government obligation? Well, it seems like okay. We're we're abating it from ourselves? What are we abating? Right. So the the tax abatement allows you to designate kind of a certain call it a geography if you want, where you're you're showing that you've got existing tax capacity. That's the that's the term. And it's gonna be used in a way aligned with the abate all the different
purposes that are authorized by that abatement statute. You're gonna use that harness that and use it to help repay something or provide economic development. Okay. And so what you're doing is you're basically allocating funding that you already have in this case, and you're gonna direct it towards the bond repayment. Got it. It's kinda like, I don't know, an equity loan almost. In some ways. Yeah. That's a good one. And so either way, the levy is going to be increased. It's just the avenue on which we're taking to do that.
You're you're proving that you've got the capacity to make the payment by going through this public hearing and identifying it. That's that's essentially what you're doing. The levy you still have to adopt is it still gets spread over the entire city Mhmm. And your tax base. But when you when you collect the levy, you're gonna tie it out and and say, look, we showed we had capacity to do this, and now we're allocating it specifically to this bond repayment. Thank you. And and where and so how we ended up designating it, it's actually in sort of the area of town which you live.
You won't see anything different on your tax bill, but when Mhmm. The invoice comes in to make our annual payment, mechanically, how this works, it says Kevin's, you know, thousand dollars a year or whatever you pay in city taxes is going directly towards that in that entire area. That's mechanically how it works. I have the same question, Kevin. Just for understanding and making sure so we can speak intelligently, why aren't we and that makes sense. And then, Nick, too, from my understanding is,
like, since it is for, like, the two elements for public use, public building, the two ident like, by statute, we're we have to follow this one. Correct? We have to go with the tax abatement bonding? It's it's one of the only ways that the council would have authority to move ahead with the the debt issue for this. So, you know, as I mentioned, the sales tax portion, you've got a separate mechanism. There's not really any difference to the the bond holder because you got that geo pledge that's underpinning the whole thing. But from a statutory what the council has powers in in terms of incurring debt,
there wasn't enough from the sales tax, authorization. And so we needed to use this mechanism to get to the rest to fund the full project. Absolutely. Okay. Mr. Steichen, kind of a follow-up to what was already been discussed. You said TIF and abatement can't overlap. What happens you made the example of his might show a thousand dollars as designated. Yep. Are there multiple people that are gonna be overlapping? And what will it show on theirs if we get asked this question? So there won't be any the property tax statement won't say anything about the tax
abatement at all. It it'll just look like the city of Dilworth, like, that's the the levy that you adopt. It's gonna get spread over everybody. This is really a mechanism that happens at the city. Once you receive the tax revenue, you're gonna redirect it to the debt service account. The taxpayer, there's there's absolutely no difference. So I don't think there's a difference. A TIF district has a separate line item on their tax statement where the county shows them this is the portion that's your captured tax capacity. This is the growth that's happened since we created the TIF district.
And so they they do have a a separate line on their tax statement that shows that amount versus So for creating the boundaries for the abatement, you just have to exclude the ones that possibly under a TIF or Correct. Okay. Yep. Did just that's just to prove you got the capacity with the abatement. You're just proving the capacity and and, you know, the the statute itself says that the two can't overlap. So they they just they just draw that line for you. So it's just something it's it's really self administered. The county's not gonna tell you. So going forward,
just being cognizant of where this abatement area is and just understanding that until these bonds are paid off, you've already kinda used that financial tool and you can't simultaneously create a TIF district there. So that the choice was made to choose particular areas where you don't expect to use that tool. And we can't do a double abatement either. Correct? Right. So that's why you take more just established neighborhoods. We wouldn't pick, like, a new subdivision, for example, where we may have a new program in place like our tax payment program.
So that would take care of the issue that I was referring to then by choosing an older neighborhood. Mhmm. Okay. Thank you. Great questions. Are there any other questions for Nick from counsel or for Peyton or for Perry as he sits back there? Your turn is coming, Perry. Like, oh, we're getting there. We're getting there. All right. So again, thank you, Nick. I appreciate it, and great questions from counsel as we move this forward. If there are no further questions, I will entertain a motion for resolution 20 six-twenty nine. Steichen's so moved. Motion by Steichen. Second. Second by Nash.
All those in favor, say aye. Aye. Opposed? Motion carries. Again, thank you, Nick. We look forward to seeing you on the twenty second and seeing where this thing lands. Alright. Sounds good. Good to see you. Thank you. So with that, that does move us now to, number nine. Police department nine alpha, resolution twenty six thirty, the execution of memorandum of understanding between the city of Dilworth and Moorhead for animal impound services. We're bringing back the dog catcher. Are we bringing back the dog catcher? Well, in a sense, we already have one. I see it. So Good evening, chief.
Alright. Mister mayor, council members here. I'm seeking tonight for the approval of our MOU between City of Morgan and the City of Dilworth for AML Impoundment Services. Kind of a short story long. 2001 when I moved up here, FMML Hospital was our impoundment. Continued that way until late last year where they decided to cease, operations, personal and business related. So that left several agencies in a scramble trying to locate an alternative for animal hospital animal empowerment services. We did identify one. Unfortunately, that fell through due to the fiscal cost, and Moore had said they elected to convert an existing building into an animal empowerment
facility. While they're working on that, I came up with a plan c and d. Those also fell through as well. So we like to maintain our relationship with the City of Moorhead Animal Empowerment Services. The cost is offset. We actually budget about 3 to $5,000 a year, which will be the approximately the same cost. It's not up to us. It's up to how many animals are located and cannot be reunited with the families. So but should be net zero. Nothing for us. And it's just kind of a growing pain, a little learning as we go along with the city of Moorhead right now. Any questions for chief?
Thank you, chief. Hearing no questions or discussion, I will entertain a motion for resolution twenty six thirty. So moved. Motion by Borra. Second. Second by Peterson. All those in favor, say aye. Aye. Opposed? Motion carries. Thank you, chief. Thank you. With that, it does bring us to number 10. 10 is authorized by hire of administrative assistant. Peyton? Thank you, mayor, members of the council. We had over 60 applicants apply for administrative assistant position. Jessica is transitioning over to the deputy clerk role.
So in replacing it, we conducted interviews early last week. And in the end, the determination was made to extend an offer to Erin Halverson Hook, who has some municipal experience and other administrative background, family or kids that go here to DGF, and we think she'll make a great addition to the team. She stood out amongst the rest, and so we are recommending to bring on Erin with the intended start date of
June 15, contingent upon meeting all city requirements. Any questions for Pete? All right. Hearing none, I will entertain a motion for the authorization to hire, the, administrative assistant. Steichen, so moved. Motion by Steichen. Second. Second by Nash. All those in favor, say aye. Aye. Opposed? Motion carries. Welcome aboard, Erin. With that, it does move us to number 11. Council members' concerns, committee updates are on the horn. I am glad to see the animal issue resolved. I know there were some concerns about that, so that's that's good.
That's all I got. Thanks for doing that. This goes with the law enforcement appreciation week. I always enjoy going to the police station, and, they served up a fantastic meal. Whoever was working on that did a great job. It's it's always fun to see law enforcement from Moorhead, the other side of the river as well, you know, at Cass County and Clay County. So it's just a fun time to visit, you know, just figure out who people are a little bit better and the and the detectives.
So I do appreciate you having that and holding it and, and, putting it on, I guess. So the other thing, just having Memorial Day yesterday, I think it's kinda important to note. I did a lot of events yesterday. I was invited to quite a few, and every time I go, it's always a learning experience. I learned more I got to meet a family whose grandfather was part of Merrill's Marauders in World War two. And someone's family, they were in Patton's secret ghost army.
And a dedication, memorial, veteran's dedication at a cemetery. But the one that is like a continuing thing and it's so important to recognize that people are constantly working at raising awareness for veteran suicides, suicide awareness. And the family from Dilworth that lost a son to suicide, military member, They're very active in promoting their fundraising, awareness, and everything that goes along with it.
And, it was on the news a fair amount. This year, they marched. They walked to, Detroit Lakes. The next day, they come back, and then they headed out to Fargo, National Cemetery as well. So it's it's it's sad when you know somebody directly, and it's sad anyway, but when you know someone that's totally under falling in the realm of how could this ever happen and missing the key things looking back. So, I just appreciate people that are promoting, the awareness of, veteran suicide that happens way too often.
So, and thank you for Peyton. It's kinda interesting that Peyton and Becky sort of started at the same time and are sort of being gone at the same time. So it's like a big gap to fill. And, you know, we'll probably have more accolades for Peyton later, but it's kinda interesting how, how both came and are kinda coming and going at the same time. So, yeah, thank you, for Becky's service. I mean, it's amazing, and I just appreciate her. So, that's where I'm gonna end it. Thank you, mister Steichen. Julie? I don't have much for updates except for just some,
reminders that for our police department, lunch with a cop is starting. They're also doing, safety safari at the zoo this Saturday from two to six. So a couple, different events that they'll be involved with. And office attorney is, soloing now, so we're good to go there too. So some good updates from police department. Anything else, Shiley? Nope. Thank you. Peyton? You're talking about the police department and a couple have alluded to it. Just the what's really cool about some of the things we're talking about is just the collaboration of services and the coordination with other departments.
It's always refreshing to see all the departments being able to get along and make something like this work. There's a lot of scrambling going on. Thank you to Morehead for stepping up and all the agencies coming together to creatively come up with a solution for the impound. At our next meeting, we should be approving been working with a consultant on the position announcement, so we should have that at the next meeting. And I guess that's really it. Not much really to report. Thanks. Thank you, Peyton. Just quickly, I hope twenty years, Becky. Like, anything about she started when you started.
I've been the mayor for sixteen years, and I was on council for four years before that. So we started at the same time. And I always looked to her, like I said, for guidance and for that calming direction to be given, like, it's it's pretty awesome. It's pretty awesome. With that, does we do have bills to pay, so we we should we should pay the bills. I will entertain a motion to pay the bills. Alright. Motion to adjourn. Motion by Nash. Second. Second by Peterson. All those in favor, say aye. Aye. Opposed? Motion carries. With there being no further business before council this evening and there no air conditioning
in this room, we will call this meeting adjourned.