BP levy likely to tick up; Council OKs city’s 2016 preliminary tax increase

Published 10:05 am Thursday, September 17, 2015

By Ashley Steward

Owatonna People’s Press

BLOOMING PRAIRIE — Despite the city of Blooming Prairie’s portion of the Main Street reconstruction project carrying a $1.1 million price tag, residents will likely see only a slight increase in their property taxes in 2016.

Email newsletter signup

That comes after the Blooming Prairie City Council’s monthly meeting Monday, where it approved a preliminary tax levy and budget.

The city council approved a preliminary levy — including general operations and debt service — of $676,996, which is a $4,626 or 0.7 percent increase from 2015.

“I didn’t see a reason to lower the levy because next year we will have a chunk of money that needs to be paid,” said Mike Jones, Blooming Prairie city administrator.

The ‘chunk of money’ Jones is referring to is the city’s bond payment for its portion of the $2.7 million Main Street, also known as County Road 42, reconstruction project, which includes utility improvements and a diagonal parking lane and is a collaboration with Steele County.

Of that, Blooming Prairie’s proposed share of the construction cost is nearly $1.1 million, and the county is picking up the remainder for the new roadway, new sidewalks and bump-outs on the nearly half mile of the roadway from County Road 15 to U.S. Highway 218.

Last month, the City of Blooming Prairie received some relief when the Steele County Board of Commissioners approved an amendment to its cooperative agreement reflecting $100,000 of Local Road Improvement Program grant funding going to the city to offset its $340,000 parking lanes on Main Street.

In addition to the grant dollars, Jones said the utility improvements will be paid through the city’s water and sanitary sewer funds, which aren’t part of the levy, and the parking lanes will be bonded for, which will be paid for through the tax levy and special assessments.

The project is expected to be completed on Oct. 31, and Jones told the city council he hopes to have the bond issuance brought before them in November and finalized in December.

“We’ll be doing that bond issuance late enough in the year that when we look forward into 2016, all we’re really going to be doing with that project is paying interest,” he said. “In the first few years, it’s a reasonable interest rate.”

Jones said in 2016, the city will pay about $30,000 in interest, which will come out of the operating levy.

“It doesn’t require a very large expenditure of the levy,” he said.

Of the preliminary levy, $487,000 will go toward Blooming Prairie’s general operations while the remaining $189,996 will go to the debt service, which is used to pay off the city’s bonds.

Jones noted that the operating levy will increase in 2016 and the debt service will decrease.

“We are increasing operating levy in anticipation that next year we’ll lower it because my debt service levy will be going up [due to the Main Street project],” he said.

But Jones said that increase is offset by a reduction in the debt service through funds on hand.

“I didn’t want to lower the levy $25,000 or $30,000 just to turn around the next year just to increase it that same amount, so I just put it into the operating levy,” he said.

Jones said the operational budget reflects a $46,992 surplus, but the debt service budget reflects a $45,188 deficit for a net surplus of $1,804.