County will not borrow to pay for capital projects in 2013

Anoka County will not go into the bond market next year for any capital improvements projects.

By unanimous vote, the Anoka County Board Sept. 25 approved the 2013 capital improvements budget – without any borrowing.

It will become part of the 2013 county budget document, which will be considered for final approval, along with the tax levy, in December.

The 2014-2017 capital improvements program was also approved in the same motion. But that was for planning purposes only; the final capital improvements budgets for those years are likely to change.

The approved capital improvements budget for 2013 totals $30,221,674 with the largest chunk, $23,826,000, allocated for road and bridge projects.

There is also $1.9 million for building and equipment, $966,946 for the county library system, $3,184,728 for information management projects and $344,000 for a parks and recreation project.

According to information presented to the county board, federal dollars will account for $3,571,288 of the budget amount, the state, specifically the Minnesota Department of Transportation (MnDOT) $7.5 million, cities $660,000 and the county $18,405,386.

But none of the $18,405,386 will come through the bonding process; all the dollars will be taken from the 2013 county budget.

According to Cevin Petersen, county finance and central services division manager, 2013 will be the first time in some 15 years that the county board will not issue bonds to finance some capital improvements projects.

The capital improvements program for 2013 adopted for planning purposes only by the board in 2011 did include bonding, but the board’s Finance and Capital Improvements Committee whittled the 2013 proposals down to the point where the projects could be paid for without borrowing, Petersen said.

According to the 2013 capital improvements budget document, $3.844 million will be taken from available debt service reserves, $1.9 million from the county building fund, $966,846 from the library building fund, $2,601,440 from capital projects funds, $258,000 from the informational technology fund and $8,835,000 from the county’s road and bridge levy.

By not bonding in 2013, the county will be able to reduce its debt service levy by $1,310,053 from a projected $19,267,945 this year to $17,957,892 in 2013.

But although the board action was unanimous and there was no public comment at the public hearing on the capital improvements budget and program, there was plenty of discussion by board members.

Commissioners Dan Erhart, Jim Kordiak and Carol LeDoux were all concerned that the county was losing an opportunity to finance long-term infrastructure projects while bond interest rates were at historic low levels.

But County Board Chairperson Rhonda Sivarajah and Commissioners Matt Look, Robyn West and Andy Westerberg thought that it was important to pay down the county’s debt.

Kordiak called it a “substantive philosophical discussion,” in which he could see both sides of the issue.

But he was concerned that by not taking advantage of interest rates, which are the lowest since World War II, along with the county’s AAA bond rating, the county that putting off infrastructure projects might cost the county more in the future, Kordiak said.

According to Sivarajah, the county is using federal and state dollars for projects and was not neglecting its infrastructure.

And the cost of debt service on the county tax of $608 on an average home valued at $176,000 was $94, which, together with public safety (sheriff, corrections and county attorney), was the highest on the tax bill, even more than human services, Sivarajah said.

“We can focus our resources on truly important programs,” she said.

According to Look, who chairs the board’s Finance and Capital Improvements Committee, not bonding in 2013 will allow some room for bonding in the future for some large projects, like Highway 10 interchanges, which were at least six years away.

Now it is more important to reduce the debt, not raise it, Look said.

Erhart described it as “unfortunate” that the board was not taking advantage of the low interest rates to invest in infrastructure that are of a long-term benefit.

The county’s current debt was well within its debt limit and had not hurt its bond rating, he said.

“We are losing an opportunity,” Erhart said.

LeDoux echoed Erhart’s comments while recognizing the need to reduce the debt.

Both West and Westerberg said the county needed to stop borrowing.

According to Westerberg, the county had to set priorities on what it could afford.

Building and equipment projects – all of a maintenance or replacement nature, Petersen said – include  $760,000 to replace an aging air conditioning system on the roof of the Anoka County Jail, $450,000 for elevator upgrades and $357,000 for county building security enhancements.

Two library projects are planned, parking lot rehabilitation at the Johnsville Library ($273,946) and construction of a drive-through and parking lot work at the Northtown Library ($693,000).

Information management projects include $1.3 million to replace voting equipment, $501,700 for human services division imaging and $478,000 for a public health information management system.

For the parks and recreation department, $344,000 has been budgeted for Columbus/Rice Creek land acquisition. That will be paid for from a Metropolitan Council parks grant that has been received, Petersen said.

Road and bridge projects in the 2013 capital improvements budget include $3.5 million for the annual pavement rehabilitation program, $1.626 million for signal projects, $700,000 for a Main Street pedestrian bridge over I-35W and $1.5 million as the second payment on the project to reconstruct Bunker Lake Boulevard from Seventh Avenue to 38th Avenue.

According to Doug Fischer, county highway director, the first payment on that project was included in the 2012 capital improvements budget.

The project was scheduled to start this year and be completed in 2013, but for technical reasons it has been delayed so the entire project will take place next year, Fischer said.

The biggest chunk of the road and bridge budget, $10 million, is for the proposed Highway 10/Armstrong Boulevard interchange in Ramsey.

But Fischer said that was a placeholder amount, dependent on federal and state funding being approved for the project, which has not happened yet.

The 2014 capital improvements program has $25 million earmarked for the interchange project, which again is predicated on other sources of funding being available.

Money is included for right of way acquisition for two projects scheduled for reconstruction in 2014 – $2.9 million for University Avenue from 109th to 121st avenues in Blaine and Coon Rapids and $2 million for the Foley Boulevard project in Coon Rapids from Highway 10 to Egret Boulevard.

Funding for the reconstruction work for both these projects is part of the 2014 capital improvements program.

But Fischer said the city of Coon Rapids has expressed concern about two major north-south routes in the city being under construction at the same time.

“We are taking a close look at what we are going to do,” he said.

There is $500,000 in the road and bridge budget for construction of a vehicle and salt facility for the southeast portion of the county, on which the county is working with the city of Lino Lakes in a joint project on that city’s public work property, according to Fischer.

Currently, crews have to load up with salt at either the county public works facility in Andover or a MnDOT depot in Spring Lake Park.

“This will be more efficient,” Fischer said.

Peter Bodley is at [email protected]