TOWER— The city council here took a leap on Monday and approved the bid from Lakehead Constructors to build a new drinking water treatment plant to serve Tower and Soudan despite a remaining million-dollar funding gap. The project, now estimated to cost $10.7 million, including construction and related engineering and construction administration, has been in the works for at least five years, but dramatic escalations in the cost of the project had prompted city and Breitung Township officials to pursue cheaper alternatives or other funding sources.
But when a new round of bidding suggested little prospect for cost savings on construction, the jointly-managed Tower-Breitung Waste Water Board recommended that the city and township move forward with the project even as the two communities reach out for additional funding.
The two communities plan to finance the project through a combination of city and federal grants, although the available grant dollars fall about $2.1 million short of the project’s estimated price tag. The communities could access that amount through a loan from the state’s Public Facilities Administration, but the cost of servicing that loan would push water rates in the two towns higher than most customers could bear.
“Worst case scenario we could borrow $2 million, but we’re not going to do that,” said Matt Tuchel, who manages the communities’ drinking water and wastewater treatment facilities.
Tuchel expressed his frustration. “I hate spending this much money, especially when we were told it would be half this amount,” he told the council.
Tuchel noted that the project budget includes $470,000 for contingencies. “Hopefully, we won’t need all that which can reduce the cost some.” He noted, as well, that the project will be built over two years, so the communities will have time to identify and request other sources of funding to help close the gap. “We have no intention of borrowing $2 million,” Tuchel reiterated. “We intend to borrow $1.05 million.”
Council member Joe Morin asked if the cost would come down if the council held off and waited. “I’ve seen no indication of that,” responded Tuchel.
In the end, the council voted unanimously, with council member Kevin Norby absent, to accept the bid of $9.05 million from Lakehead Constructors.
In other action, the council approved a resolution to issue a capital improvement bond totaling $290,000 to finance the purchase of the St. Louis County public works facility on Marina Drive. The council approved the bond issuance after a short, required public hearing. Steve Altenburg was the lone Tower resident to raise objections to the bond and acquisition of the county facility, which includes approximately 34 acres of land and 1,100 feet of frontage on Marina Drive. Altenburg questioned how the city was going to pay the cost of the bond, with its annual payment of about $38,000.
“Why aren’t you finding another solution that doesn’t just put the city deeper into debt?” he asked. “Why wasn’t a plan put in place?” he asked, suggesting that land sold by the Tower Economic Development Authority in 2022 could have covered a portion of the cost of the county garage purchase.
Mayor Dave Setterberg responded, noting that the acquisition will provide a number of cost savings, including fuel savings for all city vehicles since the city will now be able to purchase its fuel in bulk because of fuel tanks and pumps the county is leaving behind. He noted, as well, that the city is planning to lease out space in city storage garages currently used by public works, since the equipment stored in those buildings will now be relocated to the new facility.
“And there’s years’ worth of sand and salt being left as well,” noted Morin, adding that the additional open space around the facility could be available for other types of leased storage as well.
Setterberg said the facility should also save the city on maintenance and repair costs on city vehicles and equipment because the shop space in the main garage on the site is large enough, and equipped with a crane, to allow the city’s public works staff to undertake repairs and maintenance themselves, rather than hiring it out.
“If we ever did feel it was a burden, the value of the property is much more than we’re purchasing it for,” added Setterberg, and could be easily resold for considerably more.
Morin agreed. “Controlling that piece of property is a super deal,” he said.
The city is purchasing the county site for $260,000, while an additional $30,000 for the bond will cover the cost of issuance and a deposit to capitalized interest.
Other business
In other business, the council:
• Heard that the Maxfield housing study is now complete and that the city’s housing committee is currently reviewing the document. The city has also put out housing surveys at various locations in Tower and surrounding townships to solicit local views on housing needs. It’s all work being undertaken to bolster the city’s case for a housing program or project that has yet to be identified.
• Heard that the city received funding totaling $370,345 for a variety of infrastructure projects. About two-thirds of the funding is slated for storm sewer repairs with $75,000 earmarked for sewer line repairs along S. Second and Third Streets. CDBG is providing an additional $308,750 for that work. The IRRR funds will also pay for a cemetery water line and a chip reader at the Tower Airport. Council members discussed the potential for combining the sewer work with the installation of a new Green Flush bathroom facility near the civic center.
• Heard that the city did not receive an IRRR grant to match grant funding from the Minnesota Historical Society for work at the train depot. The city is continuing to pursue the project, however, and the council approved a motion to accept the proposal from architects MacDonald and Mack to assess and develop construction documents for a major repair and renovation at the historic depot.
• Requested more information before deciding on how to proceed with a planned update to the heating system at the Herbert R. Lamppa civic center, and how it might impact a request by the Tower-Soudan Civic Club to undertake a landscaping project at the civic center entrance. The civic center has a 3,000-gallon underground fuel oil tank that may have to be removed or decommissioned once the current heating system is replaced, which could impact any landscaping done this year.
• Set the application fee for a chicken permit at $50.
• Approved the second reading of a minor change to Ordinance 82 that would allow for single family home construction in the Harbor North zone district.
• Directed the planning and zoning commission to draft alternative ordinance updates regarding short-term rentals, one which would prohibit short-term rentals in the city’s residential districts and the other that would allow a handful of the rentals within those districts. The change would not alter the ability of Main Street or harbor zone businesses to engage in short-term rentals. Morin advocated for the prohibition on short-term rentals in the residential districts, noting that the city could loosen its regulations in the future if it deemed necessary.
• Authorized clerk-treasurer Michael Shultz to apply for a Special Evaluation Assistance for Rural Communities and Households (SEARCH) grant from USDA Rural Development. The grant would provide technical assistance to help the city develop a long-term plan for community infrastructure repairs. The USDA has funding available for small cities with limited financial means to undertake large-scale repairs to local infrastructure.
• Heard that Schultz has submitted an initial letter of interest in a $40,000 grant from the Blandin Foundation to build an ADA-accessible kayak dock at the kayak launch on the East Two River.
• Authorized Schultz and the city maintenance foreman to seek grant funding for the purchase of a utility locator device. The city is looking to split the $6,000 cost of the purchase with Breitung as well as cover as much as possible with grant funding.
• Tentatively set June 14-15 as Tidy Up Tower days this year. Unlike past years, the council indicated that they hope to focus their clean-up efforts on public spaces, like parks and roadsides along Main Street, rather than residential areas.