Moody’s upgrades Medina’s bond rating to Aa1

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Moody’s Investors Service has upgraded the city of Medina’s bond rating from Aa2 to Aa1, and as a result, the city is saving money on a $1.2 million bond sale and interest costs.

City financial advisor Shelly Eldridge, of Ehlers, brought this news to the Tuesday, Aug. 15 Medina City Council meeting. After hearing from Eldridge, the council awarded the sale of $1,210,000 in General Obligation Improvement Bonds to United Bankers’ Bank Farmers State Bank of Hamel. Proceeds from the bond sale will be used for funding road improvements in the Deerhill Preserve single-family residential subdivision, located east of Homestead Trail and west of Deerhill Road.

At the meeting, the City Council also took up other business.

Eldridge, of Ehlers, grinned as she presented to Medina a framed certificate proclaiming the city’s new Aa1 bond rating. She said that the upgrade in Medina’s rating was a big reason that the winning bid on the Deerhill Preserve bond sale carried a 2.3 percent interest rate, “a lot better” than Ehlers financial advisers had expected. The term of the bonds is 12 years.

Ehlers and Medina were able to reduce the amount of the bond sale from $1,235,000 to $1,210,000 because of a reduction in the underwriter’s discount and the cost of issuing the bonds.
Eldridge noted that the Farmers State Bank of Hamel bought the entire bond issue. She thanked the bank for taking an interest in the city.

The city of Medina is collaborating with developer, Stonegate Farms/ Property Resources Development Corporation, in constructing a public street in the Deerhill Preserve subdivision. The street will connect the existing Deerhill Road to Homestead Trail. The city will use bond sale proceeds to construct the road, and the developer will construct related storm water and utility improvements.

Moody’s Investors Service issued its credit opinion for the bond sale on Aug. 11. Moody’s said its upgrade of Medina’s bond rating to Aa1 “largely reflects the city’s exceptionally strong socioeconomic profile and financial position, as well as steady tax base growth. The rating also incorporates above average debt, pension and fixed cost burdens.”

Moody’s said that Medina has $13.8 million of outstanding general obligation unlimited tax debt, including the current bond sale.

“We expect Medina will continue to derive economic and tax base stability from its highly affluent residential base and close ties to the Twin Cities metropolitan area,” Moody’s said. “The city’s tax base grew 4.6 percent in the last year to its current $1.8 billion, as measured by economic market value.”

Dean Lunski is a few steps closer to getting key city approvals for the Medina Senior Living Community, proposed for a 10.8-acre site located north of Highway 55, west of Mohawk Drive and south of Chippewa Road.

On a 3 to 2 vote, the City Council directed city staff to prepare approval resolutions for rezoning from Rural Commercial Holding to Business District, the preliminary plat and site plan. City Councilors Lorie Cousineau and John Anderson had concerns about zoning issues and voted, “No.”

City Planning Consultant Nate Sparks described Lunski’s proposal. The Senior Living complex would be located on two of three lots on the heavily wooded site. A 2.6-acre wetland would wrap around the east side of a 90-unit senior housing building and a medical office building. A skyway would connect the two-buildings. Access would be from Chippewa Road to the north. The northern most of the three lots would be reserved for future development.

The three-story senior living building would span 100,000 square feet and contain assisted living and independent living units and underground parking. The two-story medical office building would span 25,000 square feet.

Sparks recapped issues related to rezoning the property. Lunski proposed a rezoning to Business district, which is consistent with the draft of Medina’s 2020 – 2040 Comprehensive Plan. Nursing homes, assisted living and independent living facilities are permitted in the Business district. However, Medina still is operating under its 2030 comp plan, which earmarks the property as Commercial-Highway district. The Business and Commercial-Highway districts share similar objectives, but the latter does not mention senior living facilities as allowed land uses.

City Attorney Ron Batty said the City Council needed to determine whether Lunski would need a Comprehensive Plan Amendment or whether the senior living uses would be compatible with both the current and upcoming comp plans.

City Councilor Cousineau said she was not comfortable with allowing senior living facilities in the Business district. “It’s not just this one. It’s how many of them?” she said.

City Councilor Anderson said he did not see senior assisted living as part of a business/ commercial district. He joined Cousineau in voting no for all three Lunski requests.

Public Works Supervisor Steve Scherer said Medina has experienced two water main breaks in the past four years along Highway 55 between Arrowhead and Mohawk Drives. The most recent break in July cost Medina $24,752.25 for the construction contractor, $1,460.03 for public works time and $892.60 for police time. Highway 55 traffic was disrupted and city crews shut down service to the Hennepin County Public Works Building and Loram Maintenance of Way.

Scherer said the pipe is a critical link between city wells and the water tower. The pipe is aging and breaking more frequently.

City Engineer Jim Stremel said the next step is for the city to consider the feasibility of repairing, replacing or relocating the water main. Medina might look at installing a water main loop to serve as a back-up during a main water main break.