New Prague council to pursue both referendum and EDA lease after petition on police-station bonds deemed sufficient

The New Prague City Council voted 4-1 to direct staff to pursue dual financing options for the city’s new police station after staff confirmed a petition requesting a public vote on using general obligation capital-improvement bonds met Minnesota’s statutory signature threshold.

City staff reported that Brian Paulson’s petition met the statutory sufficiency requirement of 244 valid signatures, a determination that triggers a limited legal choice for the council: either submit the bond question to voters or forgo the capital-improvement bond mechanism, city attorney Scott Riggs said.

“Under the statute, you either have to submit it for a vote or you can ignore it and leave it, lay on the table as it is, and it’ll still take effect that you cannot use the capital improvement bond process,” Riggs said, explaining the statute’s practical effect on the council’s financing options.

Council members pressed staff for timing and cost details. Staff estimated an off-cycle referendum could cost roughly $10,000 because Minnesota law requires up to 45 days of early voting; placing the question on the regular November ballot would reduce incremental logistics but still requires early-voting staffing. A council member noted the city’s prior bond sale produced a roughly 4.4% rate, while Rebecca Kurtz of financial advisor Ehlers said a lease-through-the-EDA structure would likely carry a higher rate—about 5.048% in current market conditions—because lease revenue debt is not a full-faith-and-credit general-obligation pledge.

“Today, if you issued a lease based on today’s rates … the interest rate is 5.048%,” Kurtz said, adding that lease arrangements can include callability and prepayment options that would allow refinancing if market conditions improve.

Several council members said they were concerned about the tax impact of long-term debt on homeowners and on the school district’s concurrent levy prospects. Sandra Tietz, who came to the meeting during public comment, said many residents “see the need”for the police station but are “concerned with cost” and asked whether the project could be done at a lower price. Another resident asked how much the tax increase per household would be; staff directed residents to posted tax-impact estimates and offered to discuss specifics after the meeting.

Council discussion also highlighted that the city is already under contract and has incurred design and early-construction costs, which some members said made abandoning or pausing the project costly. One council member said exiting the contract could generate liabilities he estimated might approach 10% or more of the contract amount, and urged caution about unilateral cancellation.

Faced with the legal limit posed by the validated petition and the practical trade-offs between a lower-rate general-obligation bond and a higher-rate EDA-lease structure, the council voted to direct staff to pursue both tracks—prepare the referendum materials and pursue EDA-lease steps—so the council can make a later, informed selection. Staff committed to provide an update on both paths in about two weeks.

The council’s motion to pursue dual financing paths passed 4-1. The council did not vote tonight on any bond issuance; the motion was a direction to staff to develop options and timelines for a future decision.