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Council considers bond notes, approves Libertyville Road sewer bid

ANDY HALLMAN/Ledger photo

Piper Jaffray financial consultant Travis Squires speaks to the Fairfield City Council Monday about bids on its $11 million bond.
ANDY HALLMAN/Ledger photo Piper Jaffray financial consultant Travis Squires speaks to the Fairfield City Council Monday about bids on its $11 million bond.

The Fairfield City Council met Monday and discussed bids for a little over $11 million in bond notes.

The bond notes refer to projected sewer revenues. The council received bids from five banks, with four of the five making bids for both variable and fixed rates.

First Internet Bank of Fishers, Indiana, made the low bid in the variable rate, with an initial rate of 3.317 percent. Co-Bank of Greenwood Village, Colorado, gave a bid of 3.97 percent fixed rate. Another bank, KS State Bank of Manhattan, Kansas, offered a lower fixed rate of 3.73 percent, but it had higher upfront costs ($35,000 for KS State compared to no upfront charge for Co-Bank), so Co-Bank’s total bid was lower.

Piper Jaffray financial consultant Travis Squires asked the councilors if they preferred a variable rate or a fixed rate. Councilor Katy Anderson asked Squires if the contract included a cap on the variable rate, and Squires said he would look into that.

Mayor Ed Malloy noticed that no local banks returned bids, and he asked Squires if they were informed about the loan opportunity. Squires said local banks were notified, but he added that the bond is so large that most banks lack the assets to cover it.

Anderson and fellow councilor Tom Thompson expressed a desire to go with a variable rate based on what they knew about the market. The council voted unanimously to direct Piper Jaffray to continue negotiations for a variable rate bond note. Those voting were Anderson, Thompson, Michael Halley, Doug Flournoy, Martha Rasmussen, Paul Gandy and Tom Twohill.

Libertyville road sewer

Bids also came back for another project, that of installing 6,300 feet of gravity sewer line along the north and south sides of Libertyville Road. The new sewer line will begin near the intersection of Libertyville Road and Highway 1, and go 3,500 feet to the west.

The council voted 7-0 to hire Drish Construction of Fairfield to build the sewer. The council sought bids on two ways of installing the sewer: digging a trench (alternate one); and boring underground (alternate two). Drish bid $889,100 to install the sewer through boring. That was $130,000 over the engineer’s estimate for boring.

The other company to bid on boring was Four Seasons Excavating and Landscaping of West Burlington, which bid $300,000 over the estimate at about $1,064,000.

Alternate one, the more expensive option which French-Reneker-Associates estimated to cost $792,000, received only one bid, and that was from DeLong Construction, Inc. of Washington, Iowa, at about $1,160,000. The council talked about why the bids came back higher than expected, and why so few companies bid on the project. Project manager Stephen Pedrick of French-Reneker-Associates said the market is saturated with projects, so contractors can be selective in which ones they make aggressive bids on.

“I think there are 80 projects out for bids in the state of Iowa, and there could be another 50 through the [Iowa Department of Transportation],” he told The Ledger. “There’s a lot of work to bid on.”

The council discussed the possibility of revising the project to make it cheaper. For instance, one way to do that would be to install the sewer at a shallower depth. However, City Engineer Melanie Carlson warned the council not to be short-sighted.

Carlson said it was true the city could save maybe $100,000 by raising the depth of the sewer, but it would complicate future development along Libertyville Road.

Pedrick said the new sewer would go down to a depth of at least 24 feet, according to the current plan.

“The reason it’s so deep is because it’s speculative,” he said. “Someone might develop the property west of the hospital.”

Carlson said that if more properties are developed in that area, the city could easily spend more than double the amount it saved from a shallow sewer, because it would need to install a pump station to move the sewage since gravity alone wouldn’t cut it.

Thompson asked how long it would take to get new bids on the project. Carlson said it would probably be a minimum of two months, and would require the city to push the completion date from October into the next year. Under the current contract, the sewer must be substantially done and functional by Oct. 31, and completely cleaned up with reseeded grass by May 29, 2020.

Pedrick said it was unlikely that going out for bids a second time would result in better bids. In fact, because there are so many other projects in the state out for bids, Pedrick said the new bids would be higher if anything.

RAGBRAI ordinance

The council approved the second reading of a RAGBRAI ordinance that establishes certain laws in Fairfield for the two days RAGBRAI riders will be in town: when they arrive on July 25 and when they depart the following day.

The ordinance includes a $750 vendor fee to sell to the riders outside of a normal business establishment (nonprofit fee is $350). It suspends a handful of ordinances for those two days, such as the ordinances banning beer in city parks, limiting noise from outdoor entertainment and banning people in city parks after 10 p.m.

Halley also addressed a question he has received several times since the first reading was passed, and that is why the ordinance allows for only one outdoor beverage garden. Halley said there are a few reasons for this. One is that it’s easier on law enforcement, since they can concentrate their efforts in a small area. Another is to ensure that the riders are near the designated emergency shelters so they can go inside in case of bad weather.

A third reason is economic. The Fairfield RAGBRAI committee has first dibs on hosting an outdoor beverage garden, proceeds from which cover the cost of hosting an overnight stop. Halley said the beverage garden is one of the committee’s largest revenue streams.

Presbyterian Church parking

The Presbyterian Church south of city hall has a sign indicating it is a city parking lot with a 12-hour limit. Halley said the church is having problems with cars parking there long-term, and wants the lot to revert to a private lot belonging to the church, as it was before.

Under a proposed memorandum of understanding, the church will continue to allow city employees to use the lot in exchange for the city plowing the lot. The council voted unanimously to approve the change, which means the sign will be taken down and the lot will cease to be a municipal parking lot.