Marion City Council accepts higher rate for bonds
Staff reporter
To say Marion City Council was disappointed Monday was an understatement.
The council understood the reasons for the change in the bond interest rate for the city's water treatment project but did not appreciate how it was handled by personnel from USDA Rural Development.
The city's bond counsel, Sarah Steele of Gilmore and Bell, explained Rural Development may have "jumped the gun" when it issued a 3.5 percent interest rate for bonds. Dale Yager then contacted Steele and city administrator David Mayfield Oct. 3, to inform them that the rates were based on congressional approval which won't be considered until after the Nov. 7 elections.
Therefore, the lower interest rates are not valid.
Instead the interest rate will return to the original rate of 4.25 percent.
"There was a horrible lack of communication in the Rural Development office," Steele said.
The effect on the city's annual bond payment will be from $62.750 at the lower interest rate to $70,240, which was projected in the beginning.
"I am very disappointed that Mr. Yager does not have the fortitude to (come to tonight's meeting and) admit the mistake," Mayor Martin Tice said.
Yager was scheduled to appear before the council with Steele but did not show.
The council had two options — amend a resolution and proceed to close the bond by the Oct. 12 deadline or wait until after the November elections to see if congress approves the lower rate. The council decided to approve the addendum and proceed with the bond closing.
If the council had decided to wait until November, a temporary note would have been needed until the project was completed.
The bond can be refinanced at any time after completion of the project.
The process also had to be completed to close the bond in order for the city to receive the $500,000 grant from Rural Development.
Even though disappointed with the outcome, Tice said this is where the council thought it was going to be in the beginning.
In other business:
— The council approved a payment of $112,755 to Walters Morgan for the water plant project.
— Seacat Hardware and Lumber was awarded a $5,000 city grant for a second pole barn to be used for lumber.
— A proposal from Central National Bank was approved to consolidate all city accounts. Marion National Bank also provided a proposal.
— A three-year contract was approved with auditors Swindoll, Janzen, Hawk and Loyd of McPherson for $12,600 per year for the regular audit and $5,000 per single audit that is required for federal grants.
— A budgeted transfer of $100,000 from the electrical fund to the general fund was approved.
— An ordinance was approved for the city's flood plain as required for the Rural Development grant.
— The city purchased two stoves and two refrigerators from the Elgin House. Those items will be donated to charitable causes such as St. Luke Hospital Auxiliary Thrift Shoppe or other agencies.
— Improvements at Marion Baseball Complex were put on hold per the request of the recreation commission. A five-year plan will be presented to the council in November.
— A plumbing license for Eagle Plumbing, Heating, and Air Conditioning of McPherson was approved.
— The council will hold a work session at 3 p.m. Thursday to discuss street improvements.
— Warrants and payroll were approved.
— Street superintendent Marty Fredrickson reported there was a water main leak at Eastmoor Drive and Main Street because of dry weather. More leaks could occur, he said, because of the near-drought conditions.
— City clean up week is Oct. 23-27.
— The council, economic development director Jami Williams and city attorney Dan Baldwin entered into two executive sessions. One was for attorney-client privilege, the second for trade secrets.
When the meeting reconvened, no decisions were made.
The next council meeting is at 5:30 p.m. Oct. 23 in the city building.
