The Forest Lake City Council will sign off on the city’s final 2020 budget and levy at its Dec. 9 meeting. The Truth in Taxation meeting will begin at 6:30 p.m., with a 7 p.m. regular meeting to follow. Barring unforeseen circumstances, Dec. 9 will mark the last regular City Council gatherings of the year.

The proposed final property tax levy, as discussed at the council’s Dec. 2 workshop, is approximately $10.85 million, an increase of roughly $569,000, or 5.74%, over the 2019 levy. The proposed final levy is significantly lower than the preliminary 2020 levy, which at $11.15 million would have been an 8.59% increase. At the council’s Nov. 25 meeting, City Administrator Patrick Casey explained that a number of spending items were reduced or held over for future years, among them a police captain’s position, a police scheduling change leading to reduced overtime, and reduced legal spending (the city is up to date on its union contracts and won’t need to negotiate any next year).

“The major increases in the tax levy have to do with some of the new issues that we’ve taken on with the paving and the refinancing, etc.,” Casey said on Dec. 2, referring to the city’s recent bond issue. “I think those are important issues. That is a first step toward getting on some kind of a stable ground with our infrastructure.”

The council raised no significant issues with the levy during the Dec. 2 meeting.

“I think we’ve landed in a really good place here,” Councilwoman Kathy Bystrom said. “I think it’s a really fair place for the community, and we’re getting some things accomplished that we’ve been neglecting for a very long time.”

Bond sale

Forest Lake city government is deeming its Nov. 14 bond sale a success after several competitors vied to be the low bidder on the bond issue. The bond sale included approximately $13.2 million for upcoming city water system projects and $4 million for road projects, as well as the refinancing of the remaining $19 million in debt service for the construction of the Forest Lake City Center.

Chris Mickelson, municipal advisor with public finance firm Ehlers, attended the Nov. 25 meeting of the Forest Lake City Council to discuss details of the sale. He told the council the bond sale had 11 bidders, all of whom were bidding to win.

“Any time on a competitive scale when we see three or four bids, we’re pretty pleased with that,” he said, explaining that more bidders leads to a more competitive interest rate, saving the city money in the long run.

The low bidder was J.P. Morgan Securities, with a 2.06% interest rate (Mickelson said the true interest cost is approximately 2.1%). The city will make payments on the bonds starting next year and lasting through 2035. Mickelson the refinancing of the city center bonds is projected to save the city approximately $1.59 million.

The water portion of the bond issue will be paid by water rate increases, while the road portion will be funded by a debt service levy. The council approved the bond issue in the face of several looming water infrastructure projects and the potential for worsening road conditions; before the 2020 budget, the city had not put any property tax levy dollars into street repair, relying instead only on franchise fees and state funds.

Not long after the council was briefed on the bond sale, it made a decision on one of the projects the bond dollars are paying for, making a bid award on the rehabilitation of water treatment plants 1 and 3 to Rice Lake Construction Group for $2.8 million.

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