Council OKs charter change

? Move allows city to assist hospital project.

The Hillsboro City Coun?cil has taken the next step in providing a bond issue for an estimated $1.5 million for the construction of a new facility for Hillsboro Community Hospital.

Meeting in special session Aug. 11, the council approved changes affecting two charter ordinances relating to the city?s Public Build?ing Commission. The changes essentially allow the city to provide financial support for a hospital it does not own.

The PBC was created in part to manage the city-owned facility currently rented by the hospital and Salem Home as well as other public structures. The assets of the hospital were acquired in 2008 by HMC/CAH Con?solidated Inc., which is proposing to build an $11.4 million facility starting this fall.

During its Aug. 4 regular meeting, the council approved a development agreement with HMC/CAH committing the city to provide up to $1.275 million toward construction expen?ses; the amount of the actual bond issue is estimated to be $1.5 million once legal and financing fees are included, according to City Admini?stra?tor Larry Paine.

In turn, the agreement obligates HMC/CAH to repay the bond over the 23-year life of its USDA construction loan through the Bank of Hays.

With the ordinance changes approved, the revised ordinance will be published two consecutive weeks in the official city newspaper. If the public notices are printed properly, a 60-day period for public protest will expire Oct. 25.

The next step would be to authorize and prepare the bond documents with a target date of Dec. 1 to offer the bonds to investors and Dec. 17 for the final closing.

Officials with HMC/CAH said earlier this month that hospital construction could begin as early as October.

Water tower repair

The council deferred action on the need for additional repairs to the city?s 1927 small water tower.

Paine said the contractor, Maguire Iron of Sioux Falls, S.D., discovered the bottom two rings of the tank were 1/4-inch thick while the top two rings had deteriorated to 1/16-inch thick because of exposure to chlorine-related oxidation when the water level in the tank was lowered.

The contractors said the reduced thickness would jeopardized welding repairs on the top two rings.

In consultation with the contractors and Don Heller, an engineer with EBH & Associates, Paine presented four action options:

1. Remove the top two steel rings and make the tank smaller at a cost of $14,105; however, Paine said reducing the tank capacity would affect the telemetry with the city?s main water tower, affecting residential water pressure.

2. Patch the top two rings and leave the water tower as a monument and unusable for the city?s distribution system, which would result in a $9,340 credit to the overall project.

But Paine said taking the tower off line would jeopardize the $103,000 Heritage Grant the city received for repairs because the tank is on the National Register of Historic Places, which requires the city to ?operate and maintain? the tank.

3. Replace and reseal the top two rings to keep the tower in service at a cost of $91,800.

4. Abandon the repair project and remove the tower. That would require returning the state?s grant money, plus the unknown cost of dismantling the tower. In its place, the city would be required to maintain citywide water pressure by purchasing variable-speed pumps that have a life cycle of about 20 years.

Paine reminded the council the original repair project was estimated to cost $159,360, less the $103,000 from the grant.

An initial change order, approved July 21, to replace a leaking segment of steel, increased the cost of the project to $197,340.

The additional $91,880 needed to replace the top two rings would increase costs to $289,000, but the state grant would remain in play.

Paine said he believed replacing the top two rings still would be the most economical approach in the long run.

The council deferred action to the Aug. 18 meeting, asking Paine to gather more information about the impact of removing two rings, or even one ring, on the total distribution system.

Budget hearing

The Aug. 11 meeting began with a public hearing for the 2016 city budget. Paine said the proposed budget would require a tax levy of 40.615 mills, compared to 39.574 mills in 2015 and 40.001 mills in 2014.

With no questions or comments from the public, the hearing was closed and the city council meeting resumed. The council will vote on the budget at its Aug. 18 meeting.

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