07/25/1969 Council Minutes - Laserfiche WebLink

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2 09 Many people think a greater population brings affluence but in reality more people only bring more problems which cost more money, so the Village may or may not be better off financially in a few years. Mr. L'Allier wondered assuming we are not in a financial position to put in munic- ipal water and sewer, would it be possible for the developer to sell the system back to us at the original cost of construction minus depreciation. Mr. Springsted thought this would be a good deal for the Village, but judging from the letter from Drovers State Bank thought they would not look favorably on this. He recommended a prudent contract on the part of the Village regarding the buy -back feature. Mr. Springsted mentioned the proposed tax disparity law, equalizing funds distributed to all cities and villages whereby the day may come when the Village without .industry will be the more fortunate one. We do not know how long this will take. Also the Metro Sewer Bill is a factor to consider, whereby the cost of the main interceptors will be carried by everyone. Mr. Springsted could not report anything good in the bond market and stated that the index had jumped four points higher than the historic high. There is a bill before Congress to repeal the tax exemption on Municipal bonds. If they remove the tax exempt feature it will put an end to all municipal financing in Minnesota until the Legislature meets again to raise the 7% limit. The Federal Government will get a tax increase by taking away the tax exemption. He suggested the Council send a resolution to all Congressmen saying they don't like the proposed bill. If the bill is passed it will mean an end to selling bonds for sewers,etc. and this serious situation is almost upon us. Mr. Springsted assumed the Council had negotiated with Jandric at length but men- tioned a man who had had experience in the acquisition of private systems and in particular with Jandric. He suggested the Council talk with Mr. Bob Bell, an at- torney in St. Paul and a Representative in the Legislature, as he regarded him as an expert on franchises and particularly on the buy back of the systens. Mr. Bell has had experience with Jandric in Inver Grove Heights and also another system in Roseville and Mr. Springsted felt he could give the Council some insights into the Jandric franchises. Mr. L'Allier thought this was a good idea, but mentioned that our Attorney and Eng. had spent many hours on the proposed franchises and thought they were the best they had seen. Mr. Springsted asserted the more advice they had the better advantage they would have. He was surprized that the Council had control of the rates and suggested the Council impose a franchise payment to the Village if net earnings justify it. Mr. L'Allier answered we would be getting some tax income from the pipes, etc., but we could perhaps impose a payment if earnings reach a certain point. Mr. Springsted mentioned that in Inver Grove Heights the Council had been highly confused by the Accounting method used by Jandric. They couldn't really tell what the earnings were, the books weren't complete and left a lot to be desired. He thought the Village should have them spell out their accounting method. Mr. Bohjanen questioned the Inver Grove Heights franchise and Mr. Springsted answered that it was a lot less strict than the one proposed for Lino Lakes. Mr. Bohjanen felt we should try to get real clear accounting methods from Jandric. Mr. Bohjanen wondered if Jandric were to put in a water system or wells for 300 homes how he could finance for future expansion. Mr. Springsted thought he could structure a repayment schedule on an oversizing basis and pay off the debt as future homes are sold. (This could also be true for the Village.)