[0:06] Turn your mic on.
[0:10] » All right. Like to call to order the
agenda. City council special session
[0:15] July 16th. It is 5:06 p.m.
And
[0:22] that mean roll call.
>> Yes. Yes.
[0:25] Um,
council member Runer
[0:29] » present.
>> Council member Helguson
[0:31] » here.
>> Council member Bailey
[0:32] » here.
>> Mayor Kirchman
[0:34] » here.
>> Also, uh, Council Member Scholander is
[0:38] excused. He did notify me what, uh, that
he had something pop up at the last
[0:42] second here, but we do still do have a
forum. Um, we have George from Northland
[0:47] Security's here. And we have Derek from
Bolton Mink. Holl's in the back taking
[0:53] notes. and your city administrator is
present. Roll call is taken, sir.
[0:57] » All right. Thank you.
>> All right.
[1:01] Um, we get a motion to adopt the agenda
for the July the July 16th, 2025 special
[1:07] meeting.
>> I will make a motion to adopt the agenda
[1:12] for our meeting July 16th, 2025.
>> I'll second.
[1:16] » All in favor?
>> Motion passes.
[1:19] All right. This is to be discussed in
possible action.
[1:24] Doris, can you speak on Northland
Securities Review Bond sales results?
[1:29] » Yes. Thank you, mayor. Um, good evening
and thank you for meeting a special
[1:34] meeting like you're doing tonight. Um,
and so the bond, as you know, is for the
[1:42] 2025 street utility improvement project.
And we've been kind of working towards
[1:48] this date. I know you've you got your
construction bids in hand. The project's
[1:53] probably slated to start very soon. So,
it's time to get the financing in place.
[1:59] And so, I'll walk you through this bond
sale summary. In particular, the the
[2:06] first page we come to um where it's more
of a summary of of the financing itself.
[2:13] So
um again uh the purpose is that street
[2:19] utility project finance plan. We we
worked with with your staff. Um you also
[2:26] reviewed at a previous meeting different
lengths of financing 15 years 20 years
[2:32] to see what was the best fit for this
project. with it being a larger project
[2:37] um
from from Kenyan's standpoint the 20
[2:42] years was was I think the better fit for
the city in terms of you know a little
[2:46] bit lower debt service payment as well
as uh you know assessments impact uh
[2:52] when you spread it out a little bit
longer. So um so the bonds are
[2:56] structured with an overall financing
term of 20 years. As part of the rating
[3:01] or I'm sorry, as part of the bond issue
process, we worked with with your
[3:07] administrator on the assignment of the
bond rating. The city has an existing
[3:13] bond rating with standard and pores of
A+.
[3:18] And so worked through that process. Um I
don't know if Scott's hair got a little
[3:24] grayer or or or there's less of it now,
but uh um they affirmed the city's bond
[3:32] rating, which was a very good result.
And and I'll just note a couple of
[3:37] things. Uh there's two highlights that I
put under that. Um they noted steady tax
[3:43] revenue growth and sound financial
management framework. I'll go into a
[3:48] little more detail on that. the they in
the in the rating report talk about um
[3:55] Kenyan's small but growing local economy
um which is driving steady tax revenue
[4:02] growth. Its operating budget is small
and exhibited mixed financial
[4:07] performance but general fund reserves
remain healthy. So that's one of the
[4:11] keys is maintaining reserves and maybe
even build up a a little bit on the
[4:17] reserves. Um,
and then it it does state this. Although
[4:22] the city's debt and liabilities burden
is higher and long-term and a long-term
[4:29] credit consideration, we believe it
remains manageable. So, um, so that
[4:35] that's, you know, kind of a negative and
positive at the same time where they
[4:39] recognize that for a city your size and
you're not alone in this comment that,
[4:44] uh, you know, the debt burden is a
little bit higher because you're a
[4:48] little lower population, but it's
manageable. They did like a lot of your
[4:54] administrators answers about kind of
like the buck stops here uh, in terms of
[5:00] expenses going forward. Is that okay
that I say that?
[5:02] » Yes, that's just fine because that's
pretty much what I said. But
[5:06] » and uh
well, okay, here's how they they say it
[5:10] in a different way, kind of a better
way. They say um staff will be exerting
[5:17] stronger controls on spending
including capital to reverse the trend
[5:22] of recent operating deficits. So, so
that was duly noted on the call that uh
[5:28] because they do factor in not only
economy
[5:33] uh finances but also management and so
they they have left the rating process
[5:40] with a positive view of management. So
um along with that so an A+ bond rating
[5:48] we were we went out and solicited quotes
from bond insurance providers
[5:54] uh nationwide there's two companies that
provide bond insurance and bond
[5:59] insurance is for the investor's benefit
but it also is benefit for the city. The
[6:05] investor's benefit is if they buy a city
of canyon bond issue, the bond insurance
[6:12] guarantees the payment of principal and
interest or the return of their
[6:16] investment. And so they are rated double
A, the bond insurance providers. And so
[6:22] that opens the door to a broader
investment market. Um and and so Scott
[6:30] was able to sit in on a couple of
pricing calls pre-sale when we talk
[6:35] about what the market's doing and you
know what are comparable municipalities
[6:41] to Kenyon when we uh when when these
interest rates were were developed when
[6:47] we brought the bonds to market and then
post sale as well. And so I don't know
[6:51] if you want to add any comments to that
Scott. No, other than, you know, I I
[6:56] thought it was a really good move when
we took a look at the insurance because
[6:59] I think it as as George was saying, it
opened us up to a whole different group
[7:03] of investors that according to the call
I was on today, these investors only are
[7:08] looking at bonds that are insured. So,
we actually got a really favorable
[7:13] outcome because of that because we we
and it also helps our rating by going
[7:18] to, you know, an A
uh plus+ is what I call it or double A
[7:25] rating, right? Or AAA rating. Um, it
really helps us because what a part of
[7:29] that what it does, the higher your
rating is just like your credit score
[7:33] personally, better interest rate you get
when you take a look at that kind of
[7:36] stuff. So, um, I appreciate George
inviting me into these calls cuz I
[7:40] learned a lot sitting down and talking
to these folks. Uh, I also verified that
[7:44] I could never be one of them because the
numbers and all the stuff that they go
[7:47] through, but it was very eye opening to
me and it was a very smooth process and
[7:52] and they answered every single question
I had and then some. So, it was a it
[7:57] went very well. So,
>> and having the insurance gives us lower
[8:01] interest rate as well.
>> Yeah, good question, Mayor. The U. So
[8:05] yes, the the benefit of the bond
insurance is is um one you it lifts your
[8:11] rating. So we we bring your bonds to
market with your underlying A+ rating.
[8:16] » Mhm.
>> And then an enhanced double A rating,
[8:20] right?
>> So the benefit of that is at the regular
[8:24] A+ rating, there's a certain level of
buyers. you're you may get the community
[8:30] banks, you may get some um individual
investors as well. The benefit of that
[8:37] insurance is that a lot of say pension
funds or mutual funds, it opens the door
[8:43] to them coming in as an investor as
well. And so that that's a positive
[8:49] because it will drive down the interest
rates a little bit.
[8:52] » We had more investors to look at and
pick and choose from.
[8:55] » That's right. So, we um it it it
definitely benefited because on a longer
[9:01] 20-year bond, um you know, there there's
a number of bonds to move, if you will,
[9:06] or place into the market. So, based upon
the cost of the insurance, it cost
[9:12] $6,300
to get the insurance. You pay a premium
[9:17] just like you would for your homeowner's
insurance premium. You pay a bond
[9:20] premium to get bond insurance. But the
benefit of it, it our bond trader
[9:26] Dustin, who was the one that talked the
most on these calls, talked about it
[9:31] benefiting you at least a tenth of a
percent, probably closer to 210 of a
[9:36] percent
>> by bringing in that extra level of
[9:39] buyers. So that interest cost savings of
just the insurance is probably 60 to
[9:45] $80,000. So So definitely worth having
it. And then I mean I mean I know this
[9:51] is a 20-year bond but then will this
help us like for future like that we
[9:55] kind of have like this good ratings or
we have a good past like say 20 years
[9:59] from now if you need to do something
like this again does this benefit us in
[10:02] the future as well.
>> Yeah good good question again. So the
[10:07] maintaining the A+ is a a positive in
itself. You're you're one step away from
[10:14] doubling. So meaning it goes in the A
category it's A minus A then A+ and then
[10:21] the next step above A+ is is double A
minus and to get into that next even
[10:28] though that's only one step it's a big
step to get into the double A category
[10:33] because that's where the bigger like a
farable you know being a broader and
[10:37] diverse economy more diverse economy a
larger tax base that's where those
[10:43] issuers are Northfield. Um on the high
end, of course, the AAA's that's where
[10:48] you're going to get your Minneapolis,
Homemstead County. Yeah, th those uh
[10:53] types of issuers. Um but it does say in
here um
[11:00] upside and downside scenario. So the
upside scenario,
[11:05] we could raise the rating if Kenyon's
economic metrics were to improve. Now,
[11:11] that's hard to control because what they
mean by that is your median household
[11:15] incomes,
>> population, some of those types of
[11:19] things. Um,
and if it's reserve levels, meaning your
[11:25] fund balances, uh, sustainably increase
to higher levels. So, so what's what
[11:31] that's saying is you're probably A+ um,
because some of those demographics are
[11:37] hard to uh to change. Um downside, we
could lower the rating if the city's
[11:43] budget were to continue producing
deficits or future capital expenses lead
[11:48] to diminished general fund reserves. So
if you drew down your reserves below
[11:54] um existing levels,
there's more of a downside risk than an
[12:00] upside uh potential, I would I would
say. So,
[12:03] » it's very important to us at the city
that we start to increase that fund
[12:07] balance that we talked about a couple
meetings ago.
[12:10] » Yeah.
>> For a lot of different reasons. This is
[12:12] one of them. Yeah. Yeah.
>> Yeah. All All very good questions,
[12:16] council. The the um so that's that's a
little bit behind the credit behind the
[12:22] bonds. Again, 20-year bonds, the average
what's called the true interest cost
[12:26] over that 20-year term is a 4.44%.
Um
[12:32] » is that a going rate or is that in what
rank of rate is that
[12:37] » for
>> for these loans?
[12:39] » Yeah, that that is um essentially what
the market is bearing in the current
[12:44] market for this credit if you will. So
for example, if you were um a stronger
[12:53] credit coming to market today, your
interest rate might be 4.25%.
[12:59] And if you are likewise issuing without
a rating, um, you know, let's just if
[13:06] there's a city smaller than Kenyon
selling bonds today, they might be
[13:10] closer to 5% or 4 and 3/4%. So, so yes,
it's it's the rate that we're seeing.
[13:16] So, we're kind of penalized for
basically the size of our town
[13:20] » because
>> we don't it's harder for us to get to
[13:23] that higher rating because we're a
smaller town and income area is not as
[13:29] easy easily changed as like far.
>> Well, I think there's there's part of it
[13:35] is that uh there's a couple things that
they look at. Population certainly is
[13:39] one of them. If you're less than 5,000,
they give you a little bit of a a
[13:45] negative connotation on that. Now, we
know that that shouldn't that's not fair
[13:51] necessarily, but it's a smaller tax
base, so there's more risk involved. Um,
[13:57] as well, if you have a fund balance
that's less than $2 million, then they
[14:03] consider that nominally low. And so even
if it might be in your um your range,
[14:10] say you have 35 to 50%
uh maintain that percentage, but if it's
[14:16] if that percentage equals $1 million,
um they consider that kind of low. So,
[14:22] so there's a couple things that cities,
>> you know, if you if you are a smaller
[14:27] community, less than 5,000, and if you
have a decent percentage, but a a
[14:33] smaller or less than $2 million fund
balance, it's it's just kind of tougher
[14:38] to get a stronger credit rating.
>> Yeah. And we looked at comparables as we
[14:43] were going through this, and as much as
I don't like paying 4% interest, it they
[14:48] were be it was fair. I mean, when you
really took a look at others that were
[14:53] it it was fair.
>> They're not taxed either, right? Certain
[15:00] federal taxes.
>> Ah,
[15:02] » right.
>> Right. So, on the investment side,
[15:07] municipal debt in Minnesota anyway is
double tax exempt. So um if you were to
[15:13] buy some of these bonds personally, the
interest that you that you earn is not
[15:19] subject to taxation. So that's that's
why um from individual standpoint, it
[15:25] it's a it's a positive or attractive
investment
[15:31] and um and sometimes community banks
also get credits
[15:37] uh for buying municipal debt as well.
So,
[15:40] so um yeah, certainly a goal would be to
maintain our credit rating at this level
[15:46] and then you know if if if there's
opportunities to um review the next time
[15:53] there's a consideration of a project
that you need financing for, you know,
[15:58] we'd probably be in a slightly better
spot if you add to your reserves. So,
[16:05] » great. Thank you for the questions. the
um a couple important things.
[16:10] Closing date, August 13th, that's when
you get the money. So, tonight there's
[16:16] that resolution. Locking in the
resolution locks in the rates and terms.
[16:21] Um closing is August 13th. Um final
maturity, again, 20 years out, February
[16:29] 1 of 20 46. And then call date, that's
the date that um you can either prepay
[16:37] on principal or refinance once you hit
that date. So that's an important date
[16:43] and and uh from the perspective of
probably more so refinancing than
[16:49] prepaying because once you reach that
call date, you're you really only have
[16:55] about a third of your principal that's
paid at that point.
[17:00] And so
part of what Scott heard on the call was
[17:06] a lot of uh um bond pricing lingo, but
one of them was what's called
[17:12] optionality. And that is that call date
because the way the bonds are priced
[17:18] it um it lends itself a little bit to be
more callable meaning more likely to get
[17:26] refinanced by the city provided interest
rates we're not going to get back to
[17:31] COVID level interest rates I don't
believe where we were in the ones but uh
[17:35] if we see kind of historical swings in
the market you know we're right now at
[17:41] maybe a little bit higher interest rates
because of volatility in 2025,
[17:46] but over the c over a 20-year term, it's
certainly realistic to think that you
[17:51] would refinance this one time.
[17:56] » Um, so again, we size the bonds based
upon information from Derek on low bid,
[18:04] you know, the other project related
costs and then um, you know, factored in
[18:09] the cost of issuance. So, there's no out
of pocket for the city. And uh I can
[18:16] address any other questions you might
have, mayor or councel.
[18:21] I think I'm good.
[18:28] » All right. There's no questions. Then
we're looking for a motion for
[18:31] resolution 202522
awarding the sale of general obligation
[18:35] bond series 2025A.
We have a motion.
[18:44] » I will make a motion to accept
resolution 202522.
[18:49] » I'll second it.
>> All in favor?
[18:52] » I
>> I motion passes for resolution 2025-22
[18:57] awarding sale of general oblation bond
series 2025A.
[19:02] » So, Mr. Mayor, you and I all just have
to sign that resolution then after the
[19:06] meeting here. Okay.
>> All right.
[19:08] That's all for me, mayor. Thank you. All
right. Thank you.
[19:11] » Thank you.
>> All right.
[19:14] » Thanks, George. Nice job.
>> Yeah.
[19:17] » Moving on to Adro proposal for
accounting services.
[19:23] » Can you speak on that, Scott?
>> I can. or if anybody wants to open it up
[19:26] to questions to start with and then I
can
[19:31] Did everybody have an opportunity to
take a look at and understand what uh I
[19:36] was proposing there?
Um yeah I I didn't get to read it as but
[19:42] so is this going to be
um in place of our finance director or
[19:50] » so this would be in so in interim this
would be actually bridging the gap. Yes.
[19:56] This isn't forever going on forever and
ever.
[19:59] » Sure.
>> So when
[20:02] uh sorry I'm just trying to get
>> we got a fire instructor in here.
[20:05] » That's really it. And then these folks
would actually work with the finance
[20:08] director uh and help train on what
they've already been worked on. So this
[20:13] I just wanted to be clear this is
different than uh what we already
[20:17] approved at the council at a previous
council meeting where we uh are using
[20:22] ABDO to do payroll. Okay. So this is
outside of that. So if you look at the
[20:27] sheets on there, there were four
different topics that needed to be
[20:29] addressed. Those topics actually uh came
from myself. And I'm sorry I'm still
[20:34] scrolling here. Here we go. um those um
topics were the topics that were of
[20:40] concern of mine um where I felt that
there were some deficiencies. So when I
[20:45] re reached out to Jean, I've known Jean,
I've worked with Jean before. Um when I
[20:50] reached out to her, we kind of did put
our heads together a little bit and came
[20:53] up with what we're looking at. So if
you're looking at the ABDO document,
[20:56] Derek, you got it. Um, what we're
looking at is is the accounts payable
[21:01] review, but really just to make sure uh
I think staff does a pretty good job
[21:06] with that, but there were some
questions. It seems like staff is talked
[21:09] are talking to me uh on a daily basis on
certain things that they're finding or
[21:13] certain things that don't quite make
sense or or certain things that we just
[21:17] can't connect, you know, the dots on how
did we get to this point, right? So, I
[21:21] think taking a review of of uh of the
accounts payable there. Um, cash flow.
[21:27] That's just kind of figuring out how
bills are coming in, cash flows coming
[21:30] in. And if and if you want to look
further down, it gives you definitions
[21:34] of what I'm talking about there. I'm
just using my own terms, but it does
[21:37] have the the official scope of services
down on the next page. Um, these are
[21:42] estimated fees. Some of them may be
coming down depending upon what they
[21:46] see. Also remember we were right in the
middle of bringing KMU over into the the
[21:51] financials coming over into the city uh
and kind of putting that all together.
[21:56] Uh we were about break even right at
about the 50% mark right there. So
[22:00] they're going to take that across the
finish line for us and be able to put
[22:03] that in place and then just make sure
that uh everything is working properly.
[22:07] The biggest ticket item you see there is
the budget. And that's what I started
[22:10] talking about the other night when we
were talking to have them come in to
[22:14] help us put together our budget to get
the uh few meetings put together talking
[22:18] about um what it's going to take. All
this has to be done. We should been
[22:22] starting it already. Um we just don't
have a mechanism right now to have them
[22:27] come in. This is one of the things they
specialize in. have them come in and
[22:30] work with us to get our budget put
together and have it done by September
[22:34] 30th so we can get it into the county is
is a top priority. Um and then the cash
[22:39] » right around the corner.
>> It is. I know it's coming quick. I mean
[22:42] I've already started uh with a couple
employees. I department heads this
[22:46] morning. I was talking to them a little
bit about budgets already and that we're
[22:50] going to need to print those off and
they're going to go through and then
[22:52] I'll sit down with them and and then
bring them in. And then the cash
[22:55] investments. um couple of you, we had a
meeting before the personnel committee
[23:00] got together right before this and I
just was um just talking a little bit
[23:05] about cash investments and how I've been
on the phone with our with Laura from 3M
[23:10] and how we invest and and how we move
money and how we get the best interest
[23:14] rate and how if we need to pay for
something we can slide things over. I'm
[23:19] I'm learning a lot about the finance on
side of things here. Um, and I think to
[23:23] look at that and make sure we're doing
it properly and to make sure we have the
[23:26] proper paper trail when we move money
from one to another. What I've been
[23:31] finding is that there's no paper trail
there. There's nothing that's telling me
[23:34] why didn't we move X over to this and
and for what reason. So I think all four
[23:39] of these are very very important that we
take a look at because I want to set the
[23:44] table for the next finance direct or
finance officer that comes in here and
[23:48] make sure that
for lack of better term it's not a mess
[23:52] for somebody to walk into because I can
tell you right now seriously
[23:57] um it's a mess and my head wants to
explode sometimes when I'm looking at
[24:00] some of this kind of stuff. So, I've
been working really hard to try to to to
[24:05] dive into this as deep as I can and
understand it and try to get the the
[24:09] answers to what we're looking for here.
So,
[24:13] I may be a little biased cuz I'm into
this up to my eyeballs on the finance
[24:16] piece, but I really don't see how we
[24:25] can move forward without having this. As
much as I hate to spend the money
[24:30] because I'm frugal when it comes to that
and I was looking at all different
[24:34] avenues. How can I get around that? I'm
not sure we can afford not to do this
[24:40] right now with what I'm seeing.
>> Straighten out like we need people to
[24:44] straighten out this mess, get the next
person in so that you know set values
[24:47] like hey this is what we need to do and
your job. It's like it helps with their
[24:51] job description and everything in the
future. Correct. agree 100%. It's a
[24:55] grown running into a wall to get higher.
>> Yeah. And we all know it's been a mess
[24:59] and probably has been for a long time.
So yeah, I'm on board and and it's like
[25:03] temporary. It's not like we're paying
this bill the rest of our lives. We're
[25:06] going to pay in this. It's kind of
sucks, but we got
[25:08] » So if we get to the point,
>> if the if the council gets to the point
[25:12] or I get to the point where I'm
recommending the council, um you know, I
[25:17] think we're at a good place, we can move
on or this isn't giving us exactly what
[25:21] we were looking for. We give them a
60-day notice.
[25:24] » If for any reason we didn't pay them,
they have to give us a 30-day notice.
[25:28] Okay. But we at any time can give a
60-day notice and get out of this thing
[25:32] at any point.
Yep. But right now, if you add this all
[25:36] up, um we're on the high end. We're
looking about a $22,000 investment to
[25:42] try to get the ship writed a little bit
here. And
[25:45] » are they kind of aware too that we this
is temporary for us?
[25:49] » 100%. They they completely know. Okay.
>> Yep. That way I wanted them to come in
[25:53] and help interum and then get ready for
the next
[25:57] finance officer to be able to be hired
and be able to brought to be brought in.
[26:01] Yeah. Yeah. Yeah.
>> And in the long run, it's going to cost
[26:03] us more if we don't do it. Probably.
>> I think so.
[26:05] » I think so.
>> Setting up the next person for failure
[26:08] to try to come in and try to figure it
out. Why not
[26:11] » hire them? They know what they're doing.
>> Yeah.
[26:15] » The turnover.
>> That's funny. That's reliable. And
[26:19] » it makes the job look a little more
appeal. Yeah, instead of like coming in
[26:22] here and it seems investing.
>> And I just want to be the payroll piece
[26:26] of it may stay on just a little bit
longer because if a new person's coming
[26:30] in and trying to learn all this other
stuff, it might be at least easier
[26:33] learning curve not to have to worry
about the payroll piece for a little
[26:37] while and then we can slowly move the
payroll piece in. I can tell you I am
[26:40] thoroughly impressed with what Val's
doing from Abdo on our payroll and
[26:44] payroll is really starting to hum along.
So, we should see a reduction in the
[26:48] cost that it does because she should be
spending less hours on doing that. But,
[26:51] she's receptive. She's emails me every
day. We're talking every day if she's
[26:55] got a question. Um, things are are going
well there.
[27:01] So, that I just want you want to make
sure everybody's This is one piece,
[27:04] these four items, and then the payroll
piece is a standalone that we're talking
[27:07] about. Yep.
But I guess my
[27:12] my recommendation would be that the
council approve
[27:16] moving forward with this. And then I can
Oh, the other thing I didn't is I I did
[27:20] have Rigs go through this just to make
sure from verbiage wise everything was
[27:24] on the up and up and and making sure
that everything was consistent with what
[27:27] we want to see here at the city. He's
already gone through it. He's already
[27:30] approved it. He said everything looks
fine on this one. And um all we would
[27:35] have to do if you guys approve this is
for the mayor and I to sign the contract
[27:38] and then they will start working with us
immediately.
[27:42] [Music]
>> Oh, I think I think we have to do this
[27:46] to
>> clean things up. Yeah.
[27:48] » Okay. Well, I'll make a motion to to
accept the ADO proposal for accounting
[27:54] services. Have a second.
>> I second it.
[27:57] » All in favor?
>> I. The motion passes for the ado for
[28:02] common services.
>> Thank you. I think that's going to go a
[28:06] long way and
and we'll be able to get after things
[28:10] quicker. So, appreciate that. Thank you
very much for making
[28:13] » All right, that brings us down to
adjourn.
[28:17] » I will make a motion to adjurnn. I will
second.
[28:20] » All in favor? I
>> motion passes to adjourn the meeting at
[28:24] 5:34 p.m.
>> Excellent.