At the Montevideo City Council meeting on Monday, June 3, city staff laid out a series of decisions the council will need to make regarding proposed upgrades to the city hall HVAC system and the construction of a new fire hall.
The construction of a new fire hall is estimated to cost $2.535 million.
Montevideo Fire Chief Dave Roelike has said the biggest advantage for the department would be the extra space. He previously told the American-News that the extra space would allow the department to add a new pumper truck.
The city offices and Police Department will make use of the Fire Department’s old space for training, evidence storage, and parking.
“With computers and various electronics in the vehicles, it is very important for our emergency vehicles to be warm inside,” said Police Chief Adam Christopher. He added that being able to keep vehicles warm in the winter would improve response time.
The estimated cost for the HVAC update has now been set at $270,000.
Montevideo City Manager Steve Jones said that the current HVAC system is around 50 years old.
“It’s deteriorated, it’s an old system,” he said. Parts of it are way past their lifetime.”
Aside from the up front cost of the project weighed against their benefits, the council had a few other issues to take into consideration as well.
“Because we have not been able to work out the purchase of our preferred location, it is possible the city would have to be prepared to take the property by eminent domain,” read comments from the city staff to the city council. “We would not be able to go forward with the Fire Hall project until this was worked out, which may alter the timeline.”
City staff are not commenting on the location in question.
“It seems like this could take awhile,” said Karen Nieuwbeerta, council member. “We should get this started and see what happens.”
The fire hall project is now estimated to create a one-year increase on the tax levy of 9.55 percent, without taking into account any other increase to the general fund or debt levy, or any calculation for the city hall HVAC replacement.
“Personally, I have hopes we can take care of the HVAC another way, but I can’t promise that,” Jones told the council.
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The board will be considering an increase to the levy, or going through the difficult process of trying to take equal cuts in other parts of the budget. Another option mentioned by city staff would be to delay any other capital improvement projects, such as street improvements, for two years, to keep the debt levy increase down.
The third piece considered by the council is the potential impact a $2.535 million project may have on the city’s bond rating.
“We recently had our bond rating review with Standard & Poor’s. We will be retaining our A+ bond rating. We feel Standard & Poor’s is comfortable with us issuing new debt as old debt falls off. Staff does have a concern that if we do the fire hall project, and continue with the street plans, Standard & Poor’s will see that as an escalation in our debt, and our bond rating may suffer,” read the comments from city staff.
The city’s financial advisor for bond issues and large investments, Carolyn Drude, executive vice president of Ehlers and Associates, was present at the meeting. The council asked her for her thoughts.
“All by itself, it’s probably not going to have a large effect,” she said. “The question is, what else will be going on at the same time, there is no way of knowing everything that will come up.”
Drude said that she didn’t imagine a one-year situation would damage what Standard & Poor’s had described a history of financial stability.
She added, “It isn’t going to surprise a rating agency for a city to need a fire hall.”
No final situation regarding the projects has been made at this time. The council directed city staff to continue negotiations for the property desired for the fire hall, and an open hearing was scheduled for July 1 to gain public input.
The council will be able to make a decision after that point, but they also have the option of waiting clear until bids on the project come in, and deciding if they want to go forward or not.