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Turn your mic on.

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» All right. Like to call to order the
agenda. City council special session

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July 16th. It is 5:06 p.m.
And

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that mean roll call.
>> Yes. Yes.

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Um,
council member Runer

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» present.
>> Council member Helguson

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» here.
>> Council member Bailey

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» here.
>> Mayor Kirchman

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» here.
>> Also, uh, Council Member Scholander is

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excused. He did notify me what, uh, that
he had something pop up at the last

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second here, but we do still do have a
forum. Um, we have George from Northland

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Security's here. And we have Derek from
Bolton Mink. Holl's in the back taking

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notes. and your city administrator is
present. Roll call is taken, sir.

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» All right. Thank you.
>> All right.

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Um, we get a motion to adopt the agenda
for the July the July 16th, 2025 special

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meeting.
>> I will make a motion to adopt the agenda

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for our meeting July 16th, 2025.
>> I'll second.

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» All in favor?
>> Motion passes.

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All right. This is to be discussed in
possible action.

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Doris, can you speak on Northland
Securities Review Bond sales results?

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» Yes. Thank you, mayor. Um, good evening
and thank you for meeting a special

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meeting like you're doing tonight. Um,
and so the bond, as you know, is for the

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2025 street utility improvement project.
And we've been kind of working towards

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this date. I know you've you got your
construction bids in hand. The project's

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probably slated to start very soon. So,
it's time to get the financing in place.

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And so, I'll walk you through this bond
sale summary. In particular, the the

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first page we come to um where it's more
of a summary of of the financing itself.

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So
um again uh the purpose is that street

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utility project finance plan. We we
worked with with your staff. Um you also

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reviewed at a previous meeting different
lengths of financing 15 years 20 years

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to see what was the best fit for this
project. with it being a larger project

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um
from from Kenyan's standpoint the 20

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years was was I think the better fit for
the city in terms of you know a little

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bit lower debt service payment as well
as uh you know assessments impact uh

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when you spread it out a little bit
longer. So um so the bonds are

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structured with an overall financing
term of 20 years. As part of the rating

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or I'm sorry, as part of the bond issue
process, we worked with with your

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administrator on the assignment of the
bond rating. The city has an existing

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bond rating with standard and pores of
A+.

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And so worked through that process. Um I
don't know if Scott's hair got a little

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grayer or or or there's less of it now,
but uh um they affirmed the city's bond

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rating, which was a very good result.
And and I'll just note a couple of

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things. Uh there's two highlights that I
put under that. Um they noted steady tax

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revenue growth and sound financial
management framework. I'll go into a

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little more detail on that. the they in
the in the rating report talk about um

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Kenyan's small but growing local economy
um which is driving steady tax revenue

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growth. Its operating budget is small
and exhibited mixed financial

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performance but general fund reserves
remain healthy. So that's one of the

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keys is maintaining reserves and maybe
even build up a a little bit on the

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reserves. Um,
and then it it does state this. Although

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the city's debt and liabilities burden
is higher and long-term and a long-term

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credit consideration, we believe it
remains manageable. So, um, so that

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that's, you know, kind of a negative and
positive at the same time where they

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recognize that for a city your size and
you're not alone in this comment that,

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uh, you know, the debt burden is a
little bit higher because you're a

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little lower population, but it's
manageable. They did like a lot of your

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administrators answers about kind of
like the buck stops here uh, in terms of

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expenses going forward. Is that okay
that I say that?

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» Yes, that's just fine because that's
pretty much what I said. But

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» and uh
well, okay, here's how they they say it

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in a different way, kind of a better
way. They say um staff will be exerting

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stronger controls on spending
including capital to reverse the trend

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of recent operating deficits. So, so
that was duly noted on the call that uh

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because they do factor in not only
economy

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uh finances but also management and so
they they have left the rating process

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with a positive view of management. So
um along with that so an A+ bond rating

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we were we went out and solicited quotes
from bond insurance providers

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uh nationwide there's two companies that
provide bond insurance and bond

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insurance is for the investor's benefit
but it also is benefit for the city. The

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investor's benefit is if they buy a city
of canyon bond issue, the bond insurance

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guarantees the payment of principal and
interest or the return of their

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investment. And so they are rated double
A, the bond insurance providers. And so

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that opens the door to a broader
investment market. Um and and so Scott

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was able to sit in on a couple of
pricing calls pre-sale when we talk

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about what the market's doing and you
know what are comparable municipalities

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to Kenyon when we uh when when these
interest rates were were developed when

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we brought the bonds to market and then
post sale as well. And so I don't know

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if you want to add any comments to that
Scott. No, other than, you know, I I

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thought it was a really good move when
we took a look at the insurance because

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I think it as as George was saying, it
opened us up to a whole different group

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of investors that according to the call
I was on today, these investors only are

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looking at bonds that are insured. So,
we actually got a really favorable

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outcome because of that because we we
and it also helps our rating by going

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to, you know, an A
uh plus+ is what I call it or double A

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rating, right? Or AAA rating. Um, it
really helps us because what a part of

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that what it does, the higher your
rating is just like your credit score

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personally, better interest rate you get
when you take a look at that kind of

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stuff. So, um, I appreciate George
inviting me into these calls cuz I

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learned a lot sitting down and talking
to these folks. Uh, I also verified that

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I could never be one of them because the
numbers and all the stuff that they go

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through, but it was very eye opening to
me and it was a very smooth process and

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and they answered every single question
I had and then some. So, it was a it

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went very well. So,
>> and having the insurance gives us lower

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interest rate as well.
>> Yeah, good question, Mayor. The U. So

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yes, the the benefit of the bond
insurance is is um one you it lifts your

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rating. So we we bring your bonds to
market with your underlying A+ rating.

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» Mhm.
>> And then an enhanced double A rating,

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right?
>> So the benefit of that is at the regular

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A+ rating, there's a certain level of
buyers. you're you may get the community

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banks, you may get some um individual
investors as well. The benefit of that

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insurance is that a lot of say pension
funds or mutual funds, it opens the door

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to them coming in as an investor as
well. And so that that's a positive

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because it will drive down the interest
rates a little bit.

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» We had more investors to look at and
pick and choose from.

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» That's right. So, we um it it it
definitely benefited because on a longer

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20-year bond, um you know, there there's
a number of bonds to move, if you will,

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or place into the market. So, based upon
the cost of the insurance, it cost

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$6,300
to get the insurance. You pay a premium

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just like you would for your homeowner's
insurance premium. You pay a bond

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premium to get bond insurance. But the
benefit of it, it our bond trader

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Dustin, who was the one that talked the
most on these calls, talked about it

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benefiting you at least a tenth of a
percent, probably closer to 210 of a

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percent
>> by bringing in that extra level of

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buyers. So that interest cost savings of
just the insurance is probably 60 to

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$80,000. So So definitely worth having
it. And then I mean I mean I know this

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is a 20-year bond but then will this
help us like for future like that we

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kind of have like this good ratings or
we have a good past like say 20 years

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from now if you need to do something
like this again does this benefit us in

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the future as well.
>> Yeah good good question again. So the

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maintaining the A+ is a a positive in
itself. You're you're one step away from

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doubling. So meaning it goes in the A
category it's A minus A then A+ and then

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the next step above A+ is is double A
minus and to get into that next even

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though that's only one step it's a big
step to get into the double A category

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because that's where the bigger like a
farable you know being a broader and

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diverse economy more diverse economy a
larger tax base that's where those

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issuers are Northfield. Um on the high
end, of course, the AAA's that's where

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you're going to get your Minneapolis,
Homemstead County. Yeah, th those uh

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types of issuers. Um but it does say in
here um

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upside and downside scenario. So the
upside scenario,

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we could raise the rating if Kenyon's
economic metrics were to improve. Now,

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that's hard to control because what they
mean by that is your median household

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incomes,
>> population, some of those types of

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things. Um,
and if it's reserve levels, meaning your

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fund balances, uh, sustainably increase
to higher levels. So, so what's what

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that's saying is you're probably A+ um,
because some of those demographics are

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hard to uh to change. Um downside, we
could lower the rating if the city's

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budget were to continue producing
deficits or future capital expenses lead

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to diminished general fund reserves. So
if you drew down your reserves below

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um existing levels,
there's more of a downside risk than an

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upside uh potential, I would I would
say. So,

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» it's very important to us at the city
that we start to increase that fund

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balance that we talked about a couple
meetings ago.

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» Yeah.
>> For a lot of different reasons. This is

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one of them. Yeah. Yeah.
>> Yeah. All All very good questions,

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council. The the um so that's that's a
little bit behind the credit behind the

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bonds. Again, 20-year bonds, the average
what's called the true interest cost

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over that 20-year term is a 4.44%.
Um

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» is that a going rate or is that in what
rank of rate is that

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» for
>> for these loans?

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» Yeah, that that is um essentially what
the market is bearing in the current

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market for this credit if you will. So
for example, if you were um a stronger

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credit coming to market today, your
interest rate might be 4.25%.

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And if you are likewise issuing without
a rating, um, you know, let's just if

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there's a city smaller than Kenyon
selling bonds today, they might be

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closer to 5% or 4 and 3/4%. So, so yes,
it's it's the rate that we're seeing.

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So, we're kind of penalized for
basically the size of our town

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» because
>> we don't it's harder for us to get to

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that higher rating because we're a
smaller town and income area is not as

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easy easily changed as like far.
>> Well, I think there's there's part of it

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is that uh there's a couple things that
they look at. Population certainly is

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one of them. If you're less than 5,000,
they give you a little bit of a a

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negative connotation on that. Now, we
know that that shouldn't that's not fair

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necessarily, but it's a smaller tax
base, so there's more risk involved. Um,

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as well, if you have a fund balance
that's less than $2 million, then they

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consider that nominally low. And so even
if it might be in your um your range,

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say you have 35 to 50%
uh maintain that percentage, but if it's

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if that percentage equals $1 million,
um they consider that kind of low. So,

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so there's a couple things that cities,
>> you know, if you if you are a smaller

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community, less than 5,000, and if you
have a decent percentage, but a a

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smaller or less than $2 million fund
balance, it's it's just kind of tougher

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to get a stronger credit rating.
>> Yeah. And we looked at comparables as we

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were going through this, and as much as
I don't like paying 4% interest, it they

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were be it was fair. I mean, when you
really took a look at others that were

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it it was fair.
>> They're not taxed either, right? Certain

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federal taxes.
>> Ah,

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» right.
>> Right. So, on the investment side,

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municipal debt in Minnesota anyway is
double tax exempt. So um if you were to

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buy some of these bonds personally, the
interest that you that you earn is not

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subject to taxation. So that's that's
why um from individual standpoint, it

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it's a it's a positive or attractive
investment

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and um and sometimes community banks
also get credits

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uh for buying municipal debt as well.
So,

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so um yeah, certainly a goal would be to
maintain our credit rating at this level

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and then you know if if if there's
opportunities to um review the next time

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there's a consideration of a project
that you need financing for, you know,

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we'd probably be in a slightly better
spot if you add to your reserves. So,

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» great. Thank you for the questions. the
um a couple important things.

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Closing date, August 13th, that's when
you get the money. So, tonight there's

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that resolution. Locking in the
resolution locks in the rates and terms.

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Um closing is August 13th. Um final
maturity, again, 20 years out, February

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1 of 20 46. And then call date, that's
the date that um you can either prepay

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on principal or refinance once you hit
that date. So that's an important date

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and and uh from the perspective of
probably more so refinancing than

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prepaying because once you reach that
call date, you're you really only have

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about a third of your principal that's
paid at that point.

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And so
part of what Scott heard on the call was

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a lot of uh um bond pricing lingo, but
one of them was what's called

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optionality. And that is that call date
because the way the bonds are priced

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it um it lends itself a little bit to be
more callable meaning more likely to get

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refinanced by the city provided interest
rates we're not going to get back to

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COVID level interest rates I don't
believe where we were in the ones but uh

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if we see kind of historical swings in
the market you know we're right now at

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maybe a little bit higher interest rates
because of volatility in 2025,

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but over the c over a 20-year term, it's
certainly realistic to think that you

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would refinance this one time.

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» Um, so again, we size the bonds based
upon information from Derek on low bid,

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you know, the other project related
costs and then um, you know, factored in

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the cost of issuance. So, there's no out
of pocket for the city. And uh I can

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address any other questions you might
have, mayor or councel.

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I think I'm good.

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» All right. There's no questions. Then
we're looking for a motion for

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resolution 202522
awarding the sale of general obligation

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bond series 2025A.
We have a motion.

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» I will make a motion to accept
resolution 202522.

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» I'll second it.
>> All in favor?

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» I
>> I motion passes for resolution 2025-22

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awarding sale of general oblation bond
series 2025A.

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» So, Mr. Mayor, you and I all just have
to sign that resolution then after the

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meeting here. Okay.
>> All right.

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That's all for me, mayor. Thank you. All
right. Thank you.

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» Thank you.
>> All right.

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» Thanks, George. Nice job.
>> Yeah.

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» Moving on to Adro proposal for
accounting services.

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» Can you speak on that, Scott?
>> I can. or if anybody wants to open it up

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to questions to start with and then I
can

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Did everybody have an opportunity to
take a look at and understand what uh I

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was proposing there?
Um yeah I I didn't get to read it as but

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so is this going to be
um in place of our finance director or

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» so this would be in so in interim this
would be actually bridging the gap. Yes.

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This isn't forever going on forever and
ever.

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» Sure.
>> So when

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uh sorry I'm just trying to get
>> we got a fire instructor in here.

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» That's really it. And then these folks
would actually work with the finance

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director uh and help train on what
they've already been worked on. So this

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I just wanted to be clear this is
different than uh what we already

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approved at the council at a previous
council meeting where we uh are using

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ABDO to do payroll. Okay. So this is
outside of that. So if you look at the

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sheets on there, there were four
different topics that needed to be

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addressed. Those topics actually uh came
from myself. And I'm sorry I'm still

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scrolling here. Here we go. um those um
topics were the topics that were of

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concern of mine um where I felt that
there were some deficiencies. So when I

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re reached out to Jean, I've known Jean,
I've worked with Jean before. Um when I

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reached out to her, we kind of did put
our heads together a little bit and came

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up with what we're looking at. So if
you're looking at the ABDO document,

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Derek, you got it. Um, what we're
looking at is is the accounts payable

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review, but really just to make sure uh
I think staff does a pretty good job

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with that, but there were some
questions. It seems like staff is talked

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are talking to me uh on a daily basis on
certain things that they're finding or

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certain things that don't quite make
sense or or certain things that we just

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can't connect, you know, the dots on how
did we get to this point, right? So, I

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think taking a review of of uh of the
accounts payable there. Um, cash flow.

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That's just kind of figuring out how
bills are coming in, cash flows coming

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in. And if and if you want to look
further down, it gives you definitions

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of what I'm talking about there. I'm
just using my own terms, but it does

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have the the official scope of services
down on the next page. Um, these are

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estimated fees. Some of them may be
coming down depending upon what they

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see. Also remember we were right in the
middle of bringing KMU over into the the

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financials coming over into the city uh
and kind of putting that all together.

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Uh we were about break even right at
about the 50% mark right there. So

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they're going to take that across the
finish line for us and be able to put

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that in place and then just make sure
that uh everything is working properly.

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The biggest ticket item you see there is
the budget. And that's what I started

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talking about the other night when we
were talking to have them come in to

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help us put together our budget to get
the uh few meetings put together talking

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about um what it's going to take. All
this has to be done. We should been

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starting it already. Um we just don't
have a mechanism right now to have them

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come in. This is one of the things they
specialize in. have them come in and

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work with us to get our budget put
together and have it done by September

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30th so we can get it into the county is
is a top priority. Um and then the cash

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» right around the corner.
>> It is. I know it's coming quick. I mean

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I've already started uh with a couple
employees. I department heads this

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morning. I was talking to them a little
bit about budgets already and that we're

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going to need to print those off and
they're going to go through and then

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I'll sit down with them and and then
bring them in. And then the cash

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investments. um couple of you, we had a
meeting before the personnel committee

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got together right before this and I
just was um just talking a little bit

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about cash investments and how I've been
on the phone with our with Laura from 3M

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and how we invest and and how we move
money and how we get the best interest

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rate and how if we need to pay for
something we can slide things over. I'm

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I'm learning a lot about the finance on
side of things here. Um, and I think to

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look at that and make sure we're doing
it properly and to make sure we have the

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proper paper trail when we move money
from one to another. What I've been

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finding is that there's no paper trail
there. There's nothing that's telling me

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why didn't we move X over to this and
and for what reason. So I think all four

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of these are very very important that we
take a look at because I want to set the

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table for the next finance direct or
finance officer that comes in here and

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make sure that
for lack of better term it's not a mess

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for somebody to walk into because I can
tell you right now seriously

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um it's a mess and my head wants to
explode sometimes when I'm looking at

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some of this kind of stuff. So, I've
been working really hard to try to to to

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dive into this as deep as I can and
understand it and try to get the the

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answers to what we're looking for here.
So,

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I may be a little biased cuz I'm into
this up to my eyeballs on the finance

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piece, but I really don't see how we

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can move forward without having this. As
much as I hate to spend the money

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because I'm frugal when it comes to that
and I was looking at all different

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avenues. How can I get around that? I'm
not sure we can afford not to do this

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right now with what I'm seeing.
>> Straighten out like we need people to

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straighten out this mess, get the next
person in so that you know set values

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like hey this is what we need to do and
your job. It's like it helps with their

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00:24:51,520 --> 00:24:58,240
job description and everything in the
future. Correct. agree 100%. It's a

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00:24:55,360 --> 00:25:01,120
grown running into a wall to get higher.
>> Yeah. And we all know it's been a mess

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and probably has been for a long time.
So yeah, I'm on board and and it's like

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temporary. It's not like we're paying
this bill the rest of our lives. We're

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00:25:06,640 --> 00:25:10,880
going to pay in this. It's kind of
sucks, but we got

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» So if we get to the point,
>> if the if the council gets to the point

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or I get to the point where I'm
recommending the council, um you know, I

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think we're at a good place, we can move
on or this isn't giving us exactly what

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we were looking for. We give them a
60-day notice.

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» If for any reason we didn't pay them,
they have to give us a 30-day notice.

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Okay. But we at any time can give a
60-day notice and get out of this thing

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00:25:32,480 --> 00:25:39,840
at any point.
Yep. But right now, if you add this all

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up, um we're on the high end. We're
looking about a $22,000 investment to

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try to get the ship writed a little bit
here. And

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» are they kind of aware too that we this
is temporary for us?

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» 100%. They they completely know. Okay.
>> Yep. That way I wanted them to come in

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and help interum and then get ready for
the next

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00:25:57,760 --> 00:26:02,240
finance officer to be able to be hired
and be able to brought to be brought in.

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00:26:01,200 --> 00:26:05,120
Yeah. Yeah. Yeah.
>> And in the long run, it's going to cost

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us more if we don't do it. Probably.
>> I think so.

321
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» I think so.
>> Setting up the next person for failure

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to try to come in and try to figure it
out. Why not

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» hire them? They know what they're doing.
>> Yeah.

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00:26:15,520 --> 00:26:20,720
» The turnover.
>> That's funny. That's reliable. And

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00:26:19,360 --> 00:26:24,799
» it makes the job look a little more
appeal. Yeah, instead of like coming in

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00:26:22,799 --> 00:26:28,400
here and it seems investing.
>> And I just want to be the payroll piece

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00:26:26,640 --> 00:26:31,840
of it may stay on just a little bit
longer because if a new person's coming

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00:26:30,480 --> 00:26:35,679
in and trying to learn all this other
stuff, it might be at least easier

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00:26:33,919 --> 00:26:38,720
learning curve not to have to worry
about the payroll piece for a little

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while and then we can slowly move the
payroll piece in. I can tell you I am

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00:26:40,720 --> 00:26:46,400
thoroughly impressed with what Val's
doing from Abdo on our payroll and

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00:26:44,159 --> 00:26:49,840
payroll is really starting to hum along.
So, we should see a reduction in the

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00:26:48,080 --> 00:26:53,679
cost that it does because she should be
spending less hours on doing that. But,

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00:26:51,760 --> 00:26:58,320
she's receptive. She's emails me every
day. We're talking every day if she's

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00:26:55,200 --> 00:27:02,320
got a question. Um, things are are going
well there.

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00:27:01,039 --> 00:27:05,760
So, that I just want you want to make
sure everybody's This is one piece,

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00:27:04,000 --> 00:27:10,080
these four items, and then the payroll
piece is a standalone that we're talking

338
00:27:07,360 --> 00:27:14,640
about. Yep.
But I guess my

339
00:27:12,559 --> 00:27:18,720
my recommendation would be that the
council approve

340
00:27:16,880 --> 00:27:22,000
moving forward with this. And then I can
Oh, the other thing I didn't is I I did

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00:27:20,400 --> 00:27:26,080
have Rigs go through this just to make
sure from verbiage wise everything was

342
00:27:24,240 --> 00:27:29,520
on the up and up and and making sure
that everything was consistent with what

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00:27:27,760 --> 00:27:32,559
we want to see here at the city. He's
already gone through it. He's already

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00:27:30,799 --> 00:27:36,640
approved it. He said everything looks
fine on this one. And um all we would

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00:27:35,120 --> 00:27:40,080
have to do if you guys approve this is
for the mayor and I to sign the contract

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00:27:38,320 --> 00:27:43,919
and then they will start working with us
immediately.

347
00:27:42,790 --> 00:27:47,200
[Music]
>> Oh, I think I think we have to do this

348
00:27:46,159 --> 00:27:52,320
to
>> clean things up. Yeah.

349
00:27:48,159 --> 00:27:56,720
» Okay. Well, I'll make a motion to to
accept the ADO proposal for accounting

350
00:27:54,399 --> 00:27:59,200
services. Have a second.
>> I second it.

351
00:27:57,840 --> 00:28:04,960
» All in favor?
>> I. The motion passes for the ado for

352
00:28:02,640 --> 00:28:08,640
common services.
>> Thank you. I think that's going to go a

353
00:28:06,640 --> 00:28:12,559
long way and
and we'll be able to get after things

354
00:28:10,240 --> 00:28:15,520
quicker. So, appreciate that. Thank you
very much for making

355
00:28:13,520 --> 00:28:19,120
» All right, that brings us down to
adjourn.

356
00:28:17,120 --> 00:28:22,159
» I will make a motion to adjurnn. I will
second.

357
00:28:20,159 --> 00:28:27,440
» All in favor? I
>> motion passes to adjourn the meeting at

358
00:28:24,960 --> 00:28:30,440
5:34 p.m.
>> Excellent.