Posted: 5/16/06
More talk on no-interest bonds
County could save $3 million if approved
By David Heiller
Argus News Editor
Houston County could save up to $3 million on its proposed criminal justice center project if an application for no interest bonds is approved.
That was one of the facts to emerge from an hour-long discussion at the May 9 county board meeting.
Daniel OíNeill, a vice president with Northland Securities, explained the program, which is called Clean Renewable Energy Bonds (CREBs).
Commissioners approved applying for about $6 million in CREBs at their April 18 meeting. The bond issue is not to exceed 37.5 percent of the total project, which has an initial estimate of $15.7 million.
Interest expense on electrical, mechanical, plumbing, and technology parts of the project would be exempt, OíNeill said.
The amount could be a savings of about $300,000 a year, OíNeill estimated. Taxpayers get a clear benefit and investors receive a tax credit, he said.
That could save $3 million over 10 years, county commissioner Kevin Kelleher said.
OíNeill explained $800 million of tax credit bonds were authorized by the Energy Tax Incentive Act of 2005. They are intended to relieve energy generated from additional megawatts, he said.
There have been about 500 applications for the bonds, OíNeill said. They are funded from the smallest to the largest, and often have components like solar, geothermal, and biomass technology.
The Internal Revenue Service is processing the applications, and should be done within 90 days. if an application is accepted, the bonds must be issued by December 31, 2007.
Board chairman Kevin Kelleher asked how much politics would be involved in the final decision. He asked if the board should seek letters from legislators.
OíNeill said a letter wouldnít hurt, but that the IRS is making the decisions to take the politics out of it. He called it a clean process. ìItís on a real high speed process time,î OíNeill said.
Northland Securities will also do an ìimpact analysisî for the county to see how the CREBs would affect the financing of the project.
Johnson Controls speaks
Aaron Rittenhouse of Johnson Controls also spoke on about the proposal. He said that if his company is chosen to do the work, he would work in parallel with the project to influence the design and maximize the outcome. Utility cost would be reduced by 35 percent, he estimated.
Commissioner Ann Thompson said that the plan would add another consultant to the project.
Rittenhouse suggested that the board put a request for proposals out for the job.
What if Johnson Controls isnít the low bid, Thompson asked.
Johnson Controls has taken a calculated risk on the project, Rittenhouse answered. He asked the board to make a decision by the end of July.
Rittenhouse said at the April 18 meeting that if his company develops a project with a 15-year payback and the county decides not to have Johnson Controls implement the project, the county must reimburse Johnson Controls up to $100,000. If Johnson Controls is unable to develop a program with a 15-year payback, the county will owe nothing.
Thompson asked Rittenhouse to clarify what needs to be done next with Char Meiners, assistant county auditor.
The subject will be discussed again at the May 16 meeting. The county has until the end of May to withdraw its application if it chooses.
Other business
ï Asbestos removal: The board approved $3,400 for the removal of asbestos in the Joe Klug house that is is going to demolish at 314 South Marshal.
ï New well: Tom Molling, the highway department maintenance supervisor, said he had a new well drilled at the Houston shop due to poor performance of the old one, which was 47 feet deep. The new one is 230 feet deep, and cost about $10,500, he said.
ï MPCA contract: Commissioners approved a contract with Yaggy-Colby for Minnesota Pollution Control Agency requirements dealing with storm water run-off. Interim highway engineer Tracey Von Bargen recommended the contract.
ï Voting money denied: Auditor Pete Johnson announced that a request for $81,000 for precinct counting equipment from Minnesota had been denied.
Secretary of State Mary Kiffmeyer said in a May 1 letter that the county would have enough money from a federal grant to cover the cost of the ballot marking machines that it needs.
Johnson said that the grant money is going to the metropolitan area, and that Houston Countyís request was denied because it is sharing its equipment and combining polling places.
ìBecause you were efficient you get penalized,î Kelleher said.
ìHere we go, 80,000 bucks extra,î commissioner Dave Corcoran added.
ìI just had to vent,î Johnson said.
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