New Prague council to pursue both referendum and EDA lease options after petition on police station financing

The New Prague City Council voted 4-1 on July 7 to direct staff to pursue two financing paths for the new police station: submit the citizen petition to put a general obligation capital improvement (CIP) bond question before voters and simultaneously advance an Economic Development Authority (EDA) lease‑revenue financing option.

The action followed staff confirmation that a petition submitted June 12 by resident Brian Pollson met Minnesota’s sufficiency threshold for forcing a referendum on using CIP bonds (the statute requires 244 signatures). City staff advised that if the council declines to submit the question to voters, the statutory effect is the city cannot proceed with the CIP bond mechanism for this project.

Council members and staff framed the debate as limited to financing, not the building contract or whether construction could continue. “This is only dealing with the financing aspects of the project, not the project itself,” Josh (city staff) said during the briefing. Councilors pressed staff and the city’s financial advisor for timing and cost details before making a final financing choice.

Rebecca Curts, financial advisor with Ellers, told the council that an EDA lease structure — in which the EDA issues bonds, leases the facility to the city and the lease payments mirror debt service — typically carries a higher interest cost than a city general‑obligation issue. Curts estimated the lease route would be roughly 60 basis points higher than the GO bond rates available a few weeks earlier, putting a working estimate near 5.05 percent versus the roughly 4.4 percent seen for the GO offering. She said EDA bonds can be structured with call and refinance options to manage future market changes.

Councilors discussed logistics and timing: staff estimated roughly 30 days of lead time would be required to get a question on the November ballot and that early‑voting staffing requirements factor into referendum costs (a ballpark estimate given at the meeting was $10,000). Staff also said the EDA path would require hearings and bond sale steps likely taking at least about 90 days.

Several council members raised the limits of stopping construction once contracts are signed. One councilor said pulling out of contracts could create sizeable unknown liabilities; staff estimated such contractor exposure could be material and urged caution. Council member Sean said many signers may have thought the petition would stop construction; staff and the city attorney clarified the petition only covers the financing mechanism.

After discussion the council approved a motion to direct staff, the financial advisor and the EDA to pursue both tracks — preparing the referendum submittal and advancing EDA lease planning — and to return with updated cost estimates and timing. Council expects an update at its next meeting.

Next steps: staff will prepare deadline and ballot‑language tasks for county notice if the council elects the referendum route, and the EDA will begin the steps necessary to prepare a lease‑revenue bond sale for council review.