A bad economy has resulted in low project costs and interest rates for the city of Jordan.
Interest rates are low, and the city is taking advantage of favorable timing to refinance on past loans. City officials are hoping the proposed fire hall expansion costs no more than expected. And contracting companies looking for work are offering to build things at competitive prices.
Water plant expansion
The city will pay just less than $4.1 million for its water treatment plant expansion, more than $800,000 less than the engineer's estimate.
Jordan awarded the bid to Di-Mar Construction, the company that built the city's wastewater treatment plant as well as its booster station along Hope Avenue, City Engineer Carol Caron said.
But it was not the lowest bid of the eight the city originally received.
KHC Construction Inc. had offered to conduct the project for a little more than $3.9 million, but the contractor later wrote a letter that admitted a $350,000 error and asked to withdraw the low bid. Cities generally approve the lowest responsible bid, but Caron said that all bidders are allowed the option of withdrawing their bids up to 24 hours after bids are opened by the city.
With KHC out of the bidding, Di-Mar became the lowest bidder.
Caron said the city wouldn't receive a better price if it re-bid the project. On Monday, the city council voted 6-0 to award the bid, while Councilmember Barry Ullmann was absent from the meeting.
Renewed fire hall
Jordan's only fire hall is scheduled for an upgrade this year. Renovations and an addition will cost about $1.9 million, but the city could've bonded for up to $2.25 million.
"We hope that our estimate is high," City Administrator Ed Shukle said.
This week, the city council held a public hearing on the proposed capital improvement plan bond issue and then moved 6-0 to borrow just more than $2 million if needed. Kathy Aho of Springsted said the city could start making payments in 2010 and finish in 2029.
The actual cost of the fire hall renovation and expansion would be known before money is borrowed, so the city won't bond for more than it needs to construct the building, Finance Director Tom Nikunen said. Area townships, including Sand Creek (which had Cy Wolf as its representative at the public hearing), will pay a share of the cost, as well.
Refinancing bonds
Sensing the time was right for refinancing city bonds, Northland Securities financial adviser Paul Donna made the recommendation to the city council.
In 1998 and 2002, Jordan had borrowed money at much higher rates than the current 3.05-percent fixed interest rate offered by United Bankers Bank of Bloomington. The city bid out the refinancing and received five bids.
The balance of general-obligation bonds issued in 1998 and 2002 can be repaid by borrowing slightly more than $1.62 million and paying $215,000 in interest. By approving the refinancing with another 6-0 vote, the city council will save $178,981.25 in gross savings and $82,787.61 in PV savings. The newly purchased bond is scheduled to be paid off by 2018.
On Friday, before the bids came in, a jobs report -- bad economic news -- came out, Donna said. "That bodes well for bond issuers, because it results in lower interest rates."
"The economy was good to us, anyway," Mayor Ron Jabs said.