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only focused on land acquisition. The major points of the draft agreement that Council will need
<br />to provide staff direction on are:
<br />
<br />Financing
<br />
<br />For the land acquisition – at the time of closing, each city will need to provide their respective
<br />share of the purchase price of the land, and, in the future, their portion of the cost to move the
<br />road. The price of the land is $1,350,000 and the cities’ share of the road realignment will not
<br />exceed $325,000. The fire department is also recommending to use $300,000 of their General
<br />Fund dollars to offset the cost of the land and road, for a net cost to the cities of $1,375,000.
<br />Arden Hills share of this would be twenty-five percent, or $343,750. North Oaks and
<br />Shoreview’s share would be fourteen percent and sixty-one percent, or $192,500 and $838,750,
<br />respectively. It is recommended by staff to use a portion of the City’s excess General Fund
<br />balance following the 2019 audit to pay its share of the land cost (the total amount available is
<br />$478,000).
<br />
<br />For future station construction – the draft agreement does not bind the City to a particular
<br />financing method, but outlines two options. Should the cities agree to not have Arden Hills
<br />finance the entire project, likely through bonding, then each city would need to come up with its
<br />share of the cost to construct a new station at the time it is needed. The other option would be to
<br />have Arden Hills finance the project, likely through bonding, and have each city pay its portion
<br />of the debt service to the City annually. If the cities were interested in repaying themselves for
<br />the land acquisition through the bond proceeds, there is a three year timeline to finish the station
<br />from when the land is purchased; however, given the previous discussions and uncertainty
<br />surrounding the timeline of construction, it is unlikely the cities would be able to reimburse
<br />themselves for the land acquisition.
<br />
<br />If the City were to bond for the entire project, it could anticipate an estimated $178,000 in
<br />issuance cost, assuming a $10,000,000 project (please note this number is purely for illustrative
<br />purposes and does not represent a true project estimate). The City of Arden Hills share of this
<br />cost would be $44,500 ($178,000 x 25%). If each city were to bond individually, it is estimated
<br />Arden Hills issuance cost would be $73,000, or $28,500 more for the City than if it had bonded
<br />for the entire project. It does not appear that there is a significant difference in total principal
<br />and interest costs between the two options for any of the cities due to the size of the issue.
<br />
<br />Other notes regarding the financing. The City of Arden Hills and Shoreview are both AAA
<br />rated, meaning each city may receive favorable interest rates, it is unclear what North Oaks’
<br />bond rating is. Should each City bond individually, they would only be responsible for their
<br />respective interest costs, not a blend of rates.
<br />
<br />The Council does not need to make this decision tonight; however, if one of two financing
<br />options is not palatable, the City will want to make the other two cities aware.
<br />
<br />Timeline of Construction
<br />
<br />The timeline of construction is unknown, the fire department is only looking to purchase the land
<br />at this point. Currently, an arbitrary date stating construction will begin by June 30, 2025, is in
<br />the draft agreement; this would bind the cities to begin construction by that date, unless
<br />otherwise mutually agreed upon. This particular item is complicated in that the LJFD Board
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