Howard board approves bonding for improvements on Evergreen, Pinecrest
By Kevin Boneske
HOWARD – In anticipation of inflationary costs for reconstruction projects being more than interest rates for the village to currently borrow money, the Howard village board approved a resolution Monday, Feb. 8, to authorize the sale of $4.5 million in general obligation bonds.
The resolution states up to $3.24 million is authorized for streets improvements with another $1.26 million authorized for sewerage improvements, including, but not limited to, storm sewer improvements.
The board first decided to borrow the money Nov. 23 when it finalized the 2021 budget to finance the reconstruction of two portions of Evergreen Avenue and one section of Pinecrest Road.
Board members added $40,000 to the tax levy to pay for interest to fund the additional work in this year’s budget.
The board this week approved a bid for issuing the bonds from UMB Bank, which came in with an interest rate of 1.15 percent over 15 years.
Justin Fisher of Baird said interest rates will remain low for the time being with municipal bonds being a security sought after for people to own.
“It’s a good time to be in the bond market,” he said.
Fisher said the village’s “AA” bond rating was confirmed by S&P Global Ratings, which led to Howard being able to obtain a low rate of interest.
Compared to a previous estimate of being able to obtain an interest rate of 1.55 percent, he said a rate of 1.15 percent over the 15-year borrowing term could save the village around $220,000.
The debt service plan Fisher provided to the village shows repaying $4.5 million in bonds will result in the village incurring $445,165 in interest for a total debt service of $4,945,165.
Though the board heard from residents along Evergreen Avenue and Pinecrest Road objecting to the reconstruction work taking place sooner than they previously expected, and the financial impact of special assessments for the work, board members stated doing the work now would save money.
“If you recall, the reason we decided to do this was because, essentially, money is cheap at this point,” said Trustee Chris Nielsen. “In the long run, it’s going to cost a lot more money.”
Director of Engineering Mike Kaster said inflationary costs for construction have increased an average of 5-6 percent annually over the last 15 years.
One aspect of the work that drew objections from some residents in attendance, placing a sidewalk along a portion of Evergreen Avenue, may not necessarily end up being installed.
Director of Administrative Services Chris Haltom said the resolution the board approved identifies storm sewer and road construction, but doesn’t specifically say where in the village.
“We don’t specifically say what roads,” he said. “I suppose you could change the roads… But you would have to spend it in accordance with the resolution, which shows how much you’re going to do on roads and how much on storm sewers.”
The board voted 7-2 in favor of a resolution declaring the village’s intent to exercise special assessments upon Evergreen Avenue and Pinecrest Road.
Trustees Craig McAllister and Scott Beyer cast dissenting votes.
Kaster said the village’s special assessment policy calls for roads to be reconstructed from a rural section with a gravel shoulder and ditch drainage to an urban section with curb and gutter and storm sewer drainage when a street is 50 percent developed as determined by the number of divided lots, compared to the number of developable lots, and when one or more of the following circumstances exist:
• Where traffic or the roadway poses an immediate hazard.
• The continuation of an existing urban-type street.
• Where high traffic volumes exists.
• Where the condition of the existing street is poor.
• Where sewer and water utilities are being installed.
Kaster said sections of Pinecrest Road from Devroy Lane to Evergreen Avenue, and Evergreen Avenue from Pinecrest Road to Rolla Lane, fit many of the circumstances in the policy.
He said reconstruction projects are never popular due to the change in nature of the roadway and resulting special assessments.
Kaster said there would no special assessments charged to the affected property owners where only sidewalk would be installed, while the approximately $2 million to $2.1 million estimated cost for the roadway projects would include approximately $350,000 for sidewalk, another $350,000 for storm sewer and $1.4 million for roadway costs.
“The storm sewer is assessed 100 percent, less any oversizing, which I’m not anticipating for this particular project,” he said. “The roadway is only assessed 50 percent. Because they already have an existing roadway, our policy just states when you’re receiving a reconstructed urban road, the abutting property owners are charged only 50 percent of that cost.”
Kaster said he expects less than $1 million of the $2.1 million reconstruction cost would be assessed to the adjoining property owners with the village paying the remaining amount.
He said the village would seek bids for the work, but the board could later decide whether sidewalks or a portion of the project should be removed, for which a bid amendment could be made upon the contractor agreeing to it.