St. Croix County Board narrowly defeats resolution to borrow $90 million for government center
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By LeAnn R. Ralph
HUDSON — The St. Croix County Board has rejected a resolution approving the sale of $90 million in general obligation bonds to fund an expansion and remodeling of the government center and to refinance debt.
The vote on the resolution was 13 “yes” to six “no” at the county board’s February 1 meeting.
Since the motion pertained to an expenditure, a three-quarters “yes” vote was required to approve the resolution.
If it had passed, the resolution would have approved the issuance of $90.65 million in general obligation bonds, paid back over the next 20 years, for the government center expansion and remodeling as well as refinancing a callable debt of $2.89 million.
The project would have included an addition to the south side of the government center intended to house the St. Croix County Sheriff’s Department and the Hudson Police Department as well as other tenants, such as the Wisconsin Department of Corrections and the public defender’s office.
Table
Prior to the discussion on the resolution to issue general obligation bonds, a motion was made Rick Ottino, county board supervisor from Hudson, and seconded by Paul Berning, county board supervisor from Hudson, to table the resolution until the first meeting of the new county board after the April election.
Judy Achterhof, county board supervisor from Emerald, said she objected to tabling the resolution.
This is “not the way to go” for a nearly $90 million project, she said.
New people will be serving on the county board who do not know what has been going on, Achterhof said.
Of the 19 county board supervisory districts, 13 districts have two candidates.
Four incumbents also filed a notification of non-candidacy by the December deadline, including Ed Schachtner of Somerset, District 1; Paulette Anderson of Hammond, District 16; Judy Achterhof of Emerald, District 17; and Shelly Tomtschik of Baldwin, District 18.
Tim Hall, county board supervisor from Hudson, asked about Ottino’s reasons for the motion to table.
“I believe the new board should have a chance to look at this — $90 million is a huge expenditure,” Ottino said.
“For us to just push it through without any of the new board getting to take a look at it all, I think is improper,” he said, adding that he believes gasoline will cost $4 per gallon by Memorial Day and noting that the cost of groceries “is through the roof.”
The government center expansion also will be “a big tax burden” on the taxpayers in St. Croix County, Ottino said.
The Hudson school board is potentially considering a $90 to $100 million referendum, Berning said.
The county board should wait to see “where it all falls” with the Hudson school district before making a decision on the government center, he said.
More interest
Bob Long, county board supervisor from Hudson, said he served on the government center subcommittee and that a tremendous amount of planning and education had already gone into the process.
The longer the project is delayed, the more it is going to cost, he said.
One general estimate is that construction costs increase by 5 percent to 10 percent for every year that a project is delayed. Based on $90 million, delaying the government center project for one year at a 5 percent increase would add $4.5 million to the project.
David Peterson, county board supervisor from River Falls and chair of the St. Croix County Board, said the government center subcommittee had been working on the project for two years, had held open houses and received public comments, and that there was “no real pushback, to my knowledge.”
Delaying the vote on the resolution is not fair to the constituents, he said.
The Federal Reserve will be raising interest rates in March, and that will increase the cost of the project by $2 million more for interest, Peterson said.
The longer the delay in securing funding for the project, “the worse it will be,” he said.
The Federal Reserve’s increase in interest rates will increase the cost of the project accordingly, said Ken Witt, county administrator.
“The longer you delay, the more you will pay in interest for this project,” he said.
“Timing is very important on this to get it for the best cost for our taxpayers,” Witt said.
Ottino said he was voting for his constituents and that he “had not talked to one single person who supports” the project, with the exception of the county administration, the department heads and the four members of the administrative committee.
Natural gas was $2.50 per therm and is now over $6 per therm, he said.
“This is a terrible time for more burden,” Ottino said.
The motion to table the resolution for issuing $90.65 million in general obligation bonds until the first meeting of the new county board after the April election failed on a voice vote.
Hudson PD
Several county board supervisors asked about the status of the City of Hudson’s decision to locate the Hudson Police Department in the St. Croix County Government Center.
“We’re at the point of the chicken or the egg,” Witt said.
The City of Hudson needs to know if St. Croix County is going to expand the government center before the city can commit to locating here, he said.
If the county moves forward with the expansion, then a deadline will be set for Hudson to decide if the police department will co-locate in the new facility, Witt said.
Of the nearly $90 million for the government center, $10 million would go toward the facility for the Hudson police department, he said.
St. Croix County could lease the space to the City of Hudson, or Hudson could make an upfront contribution to building the space, or the county could loan the $10 million to Hudson, he said.
If the City of Hudson ultimately decides not to locate in the government center, then the $10 million can be used for other projects already included in the Capital Improvement Plan (CIP) approved by the county board, Witt said.
Ottino said he would be opposed to the county loaning money to the City of Hudson.
St. Croix County would not loan money to Hudson without the county board’s approval and without a contractual agreement with the City of Hudson, Witt said.
Year ahead
The first step is to secure a revenue source and then to amend the CIP budget from 2023 to 2022 to start the design this year, Witt said.
The interest rates are low now, so that’s why the project was moved up one year in the Capital Improvement Plan, he said.
The design phase of the project will take one year, and then the project can be let out for bids next spring, Witt said.
The project will start with the construction of the addition, which will take a year, and then remodeling the remainder of the government center will be completed in the third year, he said.
St. Croix County will need another judge at some point, and the state will not supply another judge unless there is a courtroom “ready to go,” Peterson noted.
Skeptic
Bob Long, county board supervisor from Hudson, described himself as a “fiscal conservative” and “one of the biggest skeptics of the project.”
Since he is fiscally conservative and a skeptic, Long said that is why he wanted to serve on the subcommittee, “to see if there is a need, if it’s affordable and if the timing is right.”
There is a clearly a need for the government center project, and the longer the delay, the more it will have an impact on the services provided to St. Croix County citizens, he said.
A delay also will make the project more expensive because of additional interest costs, Long said.
“It is going to cost a lot more if we wait. We need to move ahead,” he said.
After going through the planning process, “I am convinced we need to move forward,” Long said.
Population increase
Nobody wants to increase the cost for taxpayers, but the county also must provide services for the citizens, said Carah Koch, county board supervisor from Hudson.
The government center was built in 1993, nearly 30 years ago, and since that time, St. Croix County has been the fastest growing county in the state or the second fastest growing, she said.
St. Croix County has been adding residents, and now the county needs to provide services for those residents, Koch said.
Koch said she was confused by people saying they did not know anything about the government center project.
There have been public open houses, and St. Croix County’s website has a government center expansion page with information about the proposed project, including floor plans, she said.
The county board supervisors have the ability to ask questions, and the information is on the website and is not hidden, Koch said.
Department heads and county employees say they need more space to provide services to the constituents of the county board members, she said.
“We can’t wait on this. We’ve had plenty of information, and if we did not have enough information, we should have been asking questions. I think it’s our responsibility to vote ‘yes,’” Koch said.
Debt limit
State law sets the debt limit at 5 percent of the equalized value of a municipality, so St. Croix County has a debt limit of $600 million, said Sean Lentz of Ehlers, Inc., the county’s financial advisor.
The $90 million for the government center and refinancing existing debt from 2014 would put the county’s debt at a little over $100 million and well within the debt limit set by state law, he said.
As St. Croix County has grown, the mill rate has gone down, Lentz said.
In 2020, the mill rate was $3.50 per $1,000 of property value, and in 2019, the mill rate was $3.70, he said.
Based on no growth in the tax base, the current mill rate of $3.11 would hold, and 48 cents would be added for the government center debt for a mill rate of $3.59 per $1,000 of property value, Lentz said.
Although the calculations were based on no growth in the tax base, “there will be growth in the tax base,” Witt said.
The county had two big projects for the nursing home and the highway department, and over the years, there has still been a decline in the mill rate, he said.
“The decrease in the mill rate reflects the growth in the county. There is no end in sight to growth,” Witt said.
Lentz said he is anticipating major changes in the interest rates over the next few years.
St. Croix County has an excellent bond rating, and the proposal for the issuance of general obligation bonds would lock in the interest rate for eight years, he said.
During the next 12 years, the county could refinance at any time or could leave the interest rate as it is, Lentz said.
The tax impact on a $200,000 property with no growth would be $96 in the first year, and with 5 percent growth, would be $87, he said.
The tax impact on a $300,000 property with no growth would be $144 in the first year, and with 5 percent growth, would be $130, Lentz said.
Over 20 years, the cost to taxpayers for the government center will decrease because of increased growth in the tax base and because more taxpayers have been added, Witt said.
Votes
St. Croix County Board supervisors who voted in favor of the resolution to issue $90.65 million in general obligation bonds for the government project were Shawn Anderson (Hudson); Bob Long (Hudson); Cathy Leaf (Hudson); Carah Koch (Hudson); Bob Fiedler (Hudson); Dave Ostness (Hudson); Scott Counter (New Richmond); Scottie Ard (New Richmond); Greg Tellijohn (New Richmond); David Peterson (River Falls); Paulette Anderson (Hammond); Shelly Tomtschik (Baldwin); William Peavy (Woodville).
St. Croix County Board supervisors who voted against the resolution were Ed Schachtner (Somerset); Tim Hall (Hudson); Paul Berning (Hudson); Rick Ottino (Hudson); Daniel Hanson (New Richmond); Judy Achterhof (Emerald).
If the resolution had been approved, the St. Croix County Board would have awarded the sale of the general obligation bonds at the March meeting prior to the increase in interest rates by the Federal Reserve.
