Council expands funding to telecom project

By James Grob, jgrob@charlescitypress.com

The Charles City Council unanimously approved an additional $200,000 line of credit to help secure the financing needed to create a fiber optic broadband network in the community.

The Charles City Telecommunications Utility Board of Trustees formally requested the additional funding, which increased the up-front loan from $1 million to potentially $1.2 million.

“We’re kind of coming up to the $1 million cap,” said City Administrator Steve Diers. “With the feasibility studies and all the work that’s gone into doing this, we’re reaching that limit.”

Diers, who has been working with the utility board, explained that the board is looking at using revenue bonds instead of direct borrowing to finance the project, and that it would probably need an additional $200,000.

“That should be more than enough, but we wanted to set that amount high enough so that we know we have enough to get it to the finish line,” Diers said. “We’re right at the doorstep, and we want to see this through, so it’s going to take a little bit more to get that done.”

Mayor Dean Andrews said that the process for getting the funding has taken longer than anticipated.

“If we would’ve gotten it when we thought we were going to, we wouldn’t have needed more money,” Andrews said. “I don’t think it’s additional money that they’re spending, instead it’s just more of a timing thing.”

Diers reminded the council that once the project was running, it would be generating its own capital.

“It’s going to be all revenue-based,” Diers said. “The only taxpayer part of it is this loan up front, which the city will get paid back for.”

Diers said the additional $200,000 should more than cover any additional costs associated with getting the project to bond sale. He said that the initial $1 million in funding was just an estimate at the time, and said he didn’t think the higher amount was that big of a concern.

He also said it is anticipated that the city would be reimbursed for the $1.2 million when the bond sale is complete and the funds are received. He said the timeline to complete the bond sale would likely see closing with receipt of funds in November.

In other action Tuesday, the council approved an amended SRF loan application, which would allow the city to borrow up to $17,575,000 in state revolving loan funds to be used with the Water Resource Recovery Facility.

This amended application increases the overall request for revenue based borrowing by $405,000. Given the added costs associated with finding buried garbage on site and its hauling to the landfill as well as the recent need to bring in clay fill material, Diers told the council there is the need for additional funding on the project.

Diers said he hoped the increase will cover this and any other smaller future unexpected costs for the project. Once the construction project “gets out of the ground” there should be fewer unexpected expenses.

To pay for this additional amount, the city will either need to increase rates for sewer usage by 20% or cut other expenses to keep the 15% coverage factor for the revenue loan in place as required by SRF. The city intends to fund the remaining project costs of approximately $2,342,166 from available sanitary sewer utility funds.

Also on Tuesday, the council approved a letter of intent for Crown Point Builders and Parkside Development regarding the completion of the Parkside subdivision. The resolution expresses intent to enter into a development agreement and to provide economic development support to the Parkside Housing Development Project.

Crown Point and Parkside requested that the city provide financial support to help to defray the costs incurred by the connection with the construction of the infrastructure project through the provision of an economic development grant.

The city has been working with Crown Point to possibly finish the remaining lots in the Parkside Villa residential development on the site of the former Jefferson Elementary School.

The project began with a Community Development Block Grant that helped with the down payment to purchase the energy-efficient homes, but since that grant money has run out, developers have had a problem building the homes at a price where they were affordable.

Crown Point is requesting a 10-year property tax rebate on the improved value of the lots and newly constructed homes, which would require the city to establish a tax-increment financing (TIF) zone there. Crown Point is looking at building 20-24 additional units at the property

The amount being paid by the city per lot will be $17,500, as it was determined that would be the maximum amount of TIF that could be applied to this project, as this type of housing project limits use of TIF dollars to reimburse for infrastructure costs only.

In other action, the council unanimously approved easements for the 2020 Drainage Improvement Project, and authorized the mayor and the clerk to sign the easement agreements.

City engineer John Fallis explained to the council that the project requires both permanent easements and temporary construction easements. The permanent easements are required as utility easements for new storm sewer pipe and drainage easements for the maintenance of drainage ways. The temporary easements will allow the City’s contractor to enter onto the private properties to construct the improvements and grade the drainage ways to match the adjacent areas.

There are a total of nine easements needed for the project, including Comet Bowl at 1100 South Grand Ave., O’Reilly Auto Parts at 1116 South Grand Ave., Cory and Mavis LaBounty at South Grand Ave., Ronald and Judith Bormann at 700 J Street, Bruce and Robbin Severin at 702 J Street and Rasmussen/Hall property, one 8th Ave.

In other business, the council:
— Unanimously agreed to close Blunt Street between North Main and North Jackson from 9 a.m. to noon on Sept. 13 for the Lions Club’s drive-thru pancake breakfast.
— Unanimously approved Facade Grant funding in the amount of $4,187.85 for North Main Car Wash, located at 803 N. Main.
— Unanimously authorized a resolution requesting reimbursement from the Iowa COVID-19 Government Relief Fund. This state funding will cover 25% of wages for public safety employees. The request needs to be submitted by Sept. 15.
— Unanimously waived further subdivision requirements for Parcel G and Parcel H At 2168 Old Highway Road.