Cloverdale looking to relieve water debt ahead of Lieber project

CLOVERDALE — Anticipating one part of a wider water project meant to bring in more revenue, town leaders in Cloverdale have set a plan to rein in its related finances beforehand.

For the Cloverdale Town Council last Tuesday, getting rid of existing water bonds meant being able to take on a new mortgage of sorts.

The project entails connecting the town to Lieber State Recreation Area to treat its sewage as the latter’s treatment plan would be decommissioned. In this way, the town will gain another customer for its utilities.

Greg Guerrettaz, president of Financial Solutions Group (FSG), prefaced that the town’s revenue and expenditures since 2020 were critical to water rate increases not being warranted. Specifically, this means utilizing monies in the town’s sinking and debt service reserve (DSR) funds.

Guerrettaz explained that the town has three existing “mortgages” from 2003, 2006 and 2007. The idea is that the total of these will be paid off with the sinking and DSR funds, prior to taking on the Lieber project.

“If you own a farm like I do, you might have a mortgage on your tractor, you might have a mortgage on your other thing,” Guerrettaz visualized. “When you go to get your new mortgage for maybe your grain elevator, the banker’s gonna say, ‘What pre-existing debt do you have?’”

The impetus of that example for the town, he said, is that it would have to prove it can take care of four mortgages. This would mean raising water rates significantly, the top priority now being not to do so.

The town-specific water improvements entail replacing and rehabilitating worn-out mains and sewers, covered by issuing a bond for about $3,560,000 at this point. This bond is expected to be paid off over 20 years at a two-percent rate.

“What all this boils down to, is it benefits the ratepayer,” Guerrettaz said about the town improvements.

Meanwhile, the town will take out a new loan, or a new bond according to Guerrettaz, for $5,175,000 toward the Lieber project. This one is to be facilitated through the State Revolving Fund. Looking to the future, the yearly revenue would be approximately $31,000.

However, Guerrettaz said it is labeled as a bond anticipation note (BAN), a loan that is issued essentially to kick-start funding a future project. The possibly three-year BAN in question, though, is considered a forgivable loan.

“This project is really to the benefit of the park, not really the citizens of Cloverdale,” Guerrettaz provided, adding that the town will not have to pay interest. “It’s kind of a win-win for everybody.”

For his part, bond counsel Dennis Otten of Bose McKinney & Evans briefed the legalities of a bond ordinance with taking on the Lieber project. It includes a bond purchase agreement with the SRF that is to be executed at closing.

“More for Greg and I’s purposes, this is gonna give you a clean slate in terms of a fresh bond document,” Otten said. “This is a neat one where we’re gonna get all these funds to reimburse, and then we’re gonna do away with those old bond issues.”

The old water debt is to be paid off at the time of closing on the new Lieber bond, which is set for Nov. 22. There will be a pre-closing period during which discrepancies are addressed.

“I wasn’t sold on this project leading up to this morning,” Town Council President Brandon Tancak commented, appreciating that the water rates and Lieber revenue were addressed. “You never know. When we start hitting it rich in the Town of Cloverdale, we can pay this thing off in 12 years.”

As such, with it waiving the second reading, the council adopted Ordinance 2023-13 setting out the sewer bonds. It also approved a contract with FSG.

In other business:

• The board accepted a $500 bid for a 2009 Ford Taurus police vehicle. While bids were taken up to the meeting, this was the only one received. The vehicle was declared surplus property last month.

“I looked at this car in and out. My personal opinion is, I think it’s a fair bid,” Tancak said before the approval. It was determined that the retail value only could be up to $1,000.

• With it being tabled due to the council wanting details, the board approved to renew a vehicle lease for Kent Goldman, who is a reserve Cloverdale police officer but has worked with the town on vehicles through Andy Mohr Ford.

Clerk-Treasurer Kelly Maners said the town has paid $1,317 for the agreement, which includes the lease amount and the vehicle’s insurance. Town Marshal Adam Hull noted that Goldman has not used gas cards and has personally gotten it serviced, apart from “taking really good care of us.”

“Working with Kent over the last several years, he does go above and beyond,” Councilman Greg Jay said. “For $1,300 a year for the use of a car, for what we need it for, I think it’s a fairly reasonable cost for what we’re getting.”

• The council gave its blessing for Town Manager Jason Hartman to move forward with pursuing a grant for non-street-name sign purchases and installation. While HWC Engineering is compiling a sign inventory, Hartman said documents for the grant were due by the end of the month.

A total sign package would be $637,100, for which Hartman said the town would owe $63,000 while the state covers the rest. The work is anticipated now for November 2026, but it could be moved up.

With Councilman Larry Fidler absent, Town Attorney Richard Shagley joined Maners, Hartman, Hull and the council for the meeting.

The next regular meeting of the Cloverdale Town Council is set for Tuesday, Nov. 14 at 7 p.m. at the town hall.