Galesville council approves financing package for West Side water, sewer and street project

The Galesville City Council on June 4 unanimously approved a financing package to fund the West Side Sewer, Water and Street Project, authorizing use of TID closure proceeds, a general obligation borrowing and state loan applications.

Sean Lentz of Ehlers presented three funding streams for the project: a Clean Water Fund loan for sewer work, a Safe Drinking Water loan for the water portion, and a 20‑year general obligation promissory note for streets and storm sewer work. Lentz said the council had previously approved Davy Engineering cost estimates.

Lentz outlined the water options, saying the water portion is estimated at $1,400,000. ‘‘Option 1’’ would borrow the full amount and raise annual water revenue debt service to $150,965; under that plan the city’s revenue debt coverage would be 1.10, below the 1.25 threshold used for additional water revenue bonds and likely requiring a rate increase. ‘‘Option 2’’ would borrow $700,000 and use $694,571 in cash, producing $105,965 in annual revenue debt service and a projected 1.57 coverage ratio so no rate increase would be needed.

On sewer financing, Lentz said the sewer portion is estimated at $310,000 and recommended borrowing the full amount with a 20‑year Clean Water Fund loan at about 2.2 percent; that would add to clean-water revenue debt service and, by Lentz’s figures, leave a 1.53 coverage against the required 1.10 test.

For streets, sidewalks and storm work, the council reviewed roughly $1.74 million in costs to be financed by a general obligation note at approximately 4 percent over 20 years. Closing Tax Increment District 2 would free $238,000 to apply to the project and is expected to raise equalized value by about $12 million in 2026, which Lentz said would reduce the tax impact. Using a level payment schedule (Option 1) would project a city mill rate increase of 0.40 — about $40 on a $100,000 home — and total interest near $953,000. A structured debt schedule would smooth payments early (projecting a 0.15 mill increase, roughly $15 per $100,000) but increase total interest to about $1,316,000.

Councilmember Jesse Swing moved that the city apply the $238,000 from the TID closing plus 25 percent of the general fund unassigned balance toward a general obligation bond using a level‑payment schedule; Councilmember Jean Seely seconded. The motion passed on a 5–0 vote (Rob Grover, Randy Larson, Jean Seely, Jesse Swing and Ryker Todd voting yes). "Motion by Jesse Swing to apply the $238,000.00 from the TID closing and 25% of the unassigned balance with in the general fund using level payment schedule to finance a general obligation bond," the motion states.

Swing later moved, and Rob Grover seconded, that Ehlers use available cash to reach a 1.30 revenue debt coverage ratio for the water portion; the council approved the measure 5–0. "Motion by Jesse Swing to have Ehlers use the available cash to get to a debt coverage ration of 1.30 for the water portion of the project," the record shows.

Swing also moved that the city issue a Clean Water Fund loan not to exceed $350,000 for the sewer portion; Ryker Todd seconded and the council approved the motion unanimously. "Motion by Jesse Swing to issue a clean water fund loan not to exceed $350,000.00 for the full portion sewer portion of the West Side Project," reads the motion on the record.

The meeting adjourned after a final unanimous procedural motion by Councilmember Jean Seely.

The financing approvals authorize staff and Ehlers to proceed with the packaging and applications described; the council did not vote on a specific final bond document at the meeting. The City Clerk/Treasurer Jennifer Hess recorded the proceedings.