International Falls council approves $11.844 million guaranteed‑maximum price for water‑plant renovation, 3‑2

The International Falls City Council voted 3‑2 Monday to approve a guaranteed maximum price (GMP) contract with Rice Lake Construction for renovation of the city’s water treatment plant, authorizing a GMP of $11,844,680 and directing staff to proceed with project financing.

Council members heard a financing briefing before the vote that laid out options to pay the debt service if the council moves forward without additional state bonding. Mr. Golden, a project consultant for the city, told the council the project “is already fundable through the Public Facilities Authority in a low interest loan” because the project has been on the PFA list from prior years. Rob Eklund, the city’s lobbyist, told the council the Minnesota Legislature’s bonding and budget work remained uncertain and could affect whether local projects receive additional state assistance.

The council’s action follows a detailed staff presentation on expected annual debt service and possible rate structures. Staff estimated the water‑plant debt service at roughly $825,000 per year at the sample interest assumptions used in the briefing; by applying an existing permanent improvements (PI) budget allocation, staff said the city would need to raise about $640,000 per year from ratepayers to fully cover the debt service. Staff presented three example revenue options to generate that amount: a flat monthly charge averaging about $18 per connection; an across‑the‑board rate increase of approximately 32%; or a combination of a $10 monthly flat fee plus roughly a 15% rate increase. Staff described those figures as preliminary and said a municipal financial advisor should finalize any rate plan.

Council discussion focused on tradeoffs: whether to start work now to avoid further deterioration and parts‑availability risks, or to delay to try to obtain state bonding or grants. Mr. Golden said roughly 20–25% of the planned work addresses Department of Health regulatory items tied to the plant’s age and current code compliance. He also warned that the exact loan interest rate (presented as a 1–3% range) and final debt service would be set at loan closing.

Multiple council members and members of the public expressed concern about inflation and the possibility that project costs could rise if the city waits. Others urged patience to preserve the chance for state assistance. Mr. Eklund summarized the legislative picture as unsettled but said he expected lawmakers to eventually act.

A motion to approve the project was made by Councillor Kaler and seconded by Councillor Holden. The motion passed on a 3‑2 vote; the meeting record does not list individual roll‑call votes in the transcript excerpt available.

What happens next: staff said the project remains eligible for Public Facilities Authority financing and that final loan terms and interest rates will be confirmed at loan closing. If the council or staff elect to delay, Mr. Golden said the city would need to reapply to be included on the PFA intended‑use plan; he noted the current intended‑use plan application deadline falls this week. Staff recommended working with a municipal financial advisor to finalize rate design before implementing new charges.

The council approved the GMP despite public commenters urging the city to wait for state funding. The project approval authorizes the city to proceed with the CMAR contract at the stated GMP; detailed contract execution, loan closing and rate adjustments remain to be completed.