Hillsboro City Council OKs next funding piece for Roberts Lane extension in $1.7M state infrastructure loan

Hillsboro City Council members authorized city administrators to enter a $1.7 million loan agreement for the planned Roberts Lane extension during their Thursday, July 13 meeting.

The motion to approve the ordinance “providing for a not to exceed $1.7 million special obligation state infrastructure loan, by the city of Hillsboro, for the purpose of constructing road improvements in the city, authorizing the pledge of revenues to secure the loan and authorizing the execution of a loan agreement and a promissory note,” passed by a 6-1 vote (with council member Jason Brown dissenting), following a 7-0 vote to suspend the three-reading rule.

"We do use a suspension of the three-reading rule to comply with the funding deadlines, but no passage by emergency is needed,” safety and service director Brianne Abbott told council.

In response to a comment from councilman and finance committee member Greg Maurer, city auditor Dawson Barreras confirmed that if not approved, the city “will have to reapply for the loan again and do the whole process over, so there’ll be a resubmission fee.”

“And there’s other grants that we have obtained where we have to move on this project or we’re going to lose them,” Abbott added.

Earlier in the meeting, Abbott yielded her regular safety and service director’s report to Mike Burns, managing director of financial services firm Robert W. Baird & Co., who has worked with the city on previous major funding projects.

Burns — who began his report by praising Hillsboro for its strong financial outlook and their “great job running the city, from the council level down to administration” — explained the reasoning behind borrowing from the ODOT State Infrastructure Bank instead of other means.

“This year has been a kind of unusual year for interest rates,” Burns said. “In my role of public finance for cities, counties and school districts, interest rates are rising very quickly as well.”

In 2022, the city had worked with Burns on a one-year bond anticipation note, which he said was “great because back then interest rates were really low,” but moving forward Burns said he advised Hillsboro administration to take “a different route” (no pun intended) in their funding plans.

“Instead of selling the bonds publicly to everybody, or privately placing with a bank, what we did this time is we privately placed it with the Ohio Department of Transportation State Infrastructure Bank,” Burns said. “These programs always remain the same — they’re nice and constant — and with today's market rates going up, this is the best financing.”

According to the legislation, the city will “enter into a loan agreement with the SIB, in the amount of not to exceed $1.7 million, plus capitalized interest estimated to be $49,630.” The funding will include costs associated with the “design, engineering and construction of an extension of Roberts Lane and related new roads along with related sidewalk, lighting, water, sewer and storm water improvements.”

“The financing we were able to get for you, if you decide to move forward, is zero-percent interest for the first year, and that's on $1,650,000 and some change,” Burns said. “[There are] no payments the first year. The second year, the interest rate goes to three percent, which is below market, so by taking this to banks, the bank interest rate’s going to be a lot higher than what the three-percent rate is.

“Then it's fixed at three percent for 19 years, so the total term is 20 years, zero-percent interest in the first year, three percent in years two through 20, fixed rate.”

Burns added that the loan is “prepayable anytime after year three.”

Both Burns and Barreras also explained the section of the ordinance that states the city’s “municipal income tax [is] pledged for the payment of” the promissory note.

“That doesn't mean we have to use the municipal income tax to repay the bonds, or the loan, but it's a pledge to the loan, and that's how we were able to get the SIB comfortable doing a 20-year fixed rate,” Burns said. “It’s just a matter of getting the lowest interest rate.”

Brown asked Burns to “elaborate” further on pledging the municipal income tax for the loan.

“The State Infrastructure Bank, or a lot of banks, they need a security interest,” Burns said. He said that he “advised [the city] not to” pledge the “LTGO, the limited tax general obligation, and that's the full faith and credit of the city.

“I didn’t want to give the State Infrastructure Bank that pledge because you’re such a strong city, so a step down off of that in your favor is the municipal income tax,” Burns said. “The key is you can use any funds available. You do not have to use that money. It's just a pledge.

“Doing the income tax doesn't count against your direct debt capacity.”

Burns added that “you can use any money available — TIF [Tax Increment Financing] revenues from this project, and if those aren’t sufficient, you could use gas tax, fees, anything you have.”

Barreras agreed, pointing out a paragraph in the ordinance which reads: “Nothing in this authorizing ordinance will be deemed to prohibit the City from using … any other resources [other than the income tax] for the fulfillment of any of the terms, conditions or obligations” of the agreement.

“The city is actually financially able to make the payments for this loan for the next 10 years, just through the TIFs that we have available in the city right now,” Barreras said. “Not to mention, if we sell the properties on this new extension, all the revenue from the new TIFs that will be coming on, to maybe even paying off this loan in no time.”

As disc

ussed in March, estimates show the Roberts Lane extension to be a $10.4 million project, according to city grant writer and economic development coordinator Kirby Ellison.

The city has already secured $2.3 million from the State Controlling Board, while Ellison said that they have low-interest loan agreements from the state water pollution control revolving loan and water supply revolving loan in the amount of $3.7 million (for storm and sanitary sewers) and $1.2 million (for water), legislation for which was approved by council in April. The city also committed over $700,000 in American Rescue Plan Act dollars toward the project, while Highland County commissioners have pledged $750,000.

Prior to voting on Thursday’s legislation, finance committee chair Mary Stanforth reported that her committee met July 12 to discuss the latest numbers, which she said were similar to those previously presented. Her committee voted 2-0 to recommend the suspension of the three-reading rule and passage of the ordinance by the full council, she said.

“This financing is very beneficial,” Burns told council. “I’m personally very happy with it. It’s below market, it’s very flexible.

“There’s really no downside to the financing, in my mind.”

Other ordinances and resolutions approved Thursday included the following.

• Following a public hearing, council voted to approve an ordinance modifying the zoning classification of parcel 25-06-001-001.00.

The 5.925-acre parcel is currently vacant but was formerly used as a medical office, despite being zoned as residential.

During committee reports, zoning and annexation committee chair Brown reported on two recent meetings to discuss zoning map amendments.

Brown said that along with the Hillsboro Planning Commission, his committee has met twice to discuss a proposal to change the zoning for the parcel on North High Street from Residential “A” to Business “C.” As mentioned, a public hearing was also held Thursday before the regular council meeting, where several residents indicated they were opposed to the zoning change.

According to Brown, his committee was in favor of classifying the parcel as Business and Residential “D” instead of Business “C” as requested.

“I would just make a request on behalf of the developer — I know they're wanting to move forward,” Abbott said. “If you're wanting to make this change, you really need to suspend the three-reading rule so they can proceed with the sale.”

Abbott added that council needed to make a decision “to approve or deny” the zoning change, and that the requests made of neighboring property owners during the hearing would be up to the developer to decide, not the city.

Council president Tom Eichinger said that council “could table it to give the developer and the people time to look into” the neighbors’ requests, but city law director Randalyn Worley said that any restrictions on the property would be part of “a private transaction” and that council is only being asked to look at “the zoning of the particular parcel.”

Real estate broker Mark Wilson said the developer seemed to be agreeable to putting “restrictions on the back two acres” of the lot that adjoin a residential neighborhood.

“Just so you know, that would not affect the resolution, or the ordinance, at all,” Eichinger said. “That's just good information.”

Council voted 6-1 (with council member Jo Sanborn voting no) to suspend the three-reading rule and 7-0 to approve and adopt the ordinance.

• After hearing from public works superintendent Shawn Adkins, council voted 7-0 to approve and adopt a resolution authorizing the Safety and Service Director to purchase a Caterpillar mini hydraulic excavator through the State of Ohio Cooperative Purchasing Program, following the legislation’s third reading.

The quote for the excavator, as of May 9, was $143,957, according to the council packet.

Brown asked Adkins to explain “the benefit” of the equipment before voting.

“The biggest part of it is safety,” Adkins said. “Our trench boxes weigh 2,909 pounds. Our excavator will only lift about 2,000 pounds, so I can't set a trench box.”

Adkins explained trench safety regulations, then told council that “a three-foot by three-foot by three-foot piece of dirt weighs 2,100 pounds” if dry or over 3,000 pounds if wet.

“I don't know of anybody that can withstand a 3,000- or 2,000-pound piece of dirt falling on them,” Adkins said. “It hasn’t been that long ago that we actually had a contractor have a trench cave in, that was working for the city, and died. I will not put any of our guys in that position.”

Brown asked if the excavator the city is looking to purchase is “big enough” for their needs. “In other words, five years from now you won’t come back and say ‘hey, we want a little bit bigger one?’” he said.

Adkins said the excavator is large enough to lift their trench boxes, and if they have to “go any deeper” than 14 feet, the city would have to hire a subcontractor.

After the discussion, Brown made the motion to approve the legislation, which passed 7-0.

“Thank you, council,” Adkins said.

• Council voted 7-0 to suspend the three-reading rule and to pass a resolution to solicit bids and accept the lowest and best bid for paving the 100 block of East Beech Street, the 100 block of Willow Street and East and West Collins Avenue as an emergency.

Abbott explained that they were seeking passage as an emergency “due to the seasonal nature of paving projects.”

Eichinger asked how the city selected “these particular streets” for paving.

“At this time, North East Street, High Street and North West Street’s all paved,” Adkins said, adding that these are “crossover” streets. The ones selected are in “bad shape,” while Adkins said he also targeted streets that don’t “have a water main on it” or any plans for “excavation anytime soon.”

The resolution is to accept the lowest and best bid “not to exceed $100,000.”

“I’ve got limited funds, so I'm trying to get the best bang for the buck,” Adkins said. “The reason I’m only bringing it to you now is I have to wait on our gas tax money before I can tell you how much I can spend.

“I did talk to an engineer that [said] bidding is coming a little bit higher, so we might have to knock off one street or something.”

• Council also voted 7-0 to suspend the three-reading rule and to approve and adopt an emergency resolution authorizing the Safety and Service Director to purchase a generator for the wastewater south lift station, through the State of Ohio Cooperative Purchasing program.

“We are requesting suspension of the three-reading rule and passage and passage by emergency because the current generator is out of service and needs replaced as soon as possible,” Abbott said.

The total quote received for the purchase was $59,929, according to the legislation.

• A resolution authorizing the Safety and Service Director to apply for, accept and enter into a water pollution control loan fund agreement (WPCLF) on behalf of the City of Hillsboro for planning, design and/or construction of storm water facilities; and designating a dedicated repayment source for the loan and declaring an emergency, also passed by a 7-0 vote following suspension of the three-reading rule.

“The original application that you all approved did not include a contingency fund,” Abbott said. “It was just missed. We are asking for suspension of three-reading rule and passage by emergency just so we can continue the project. It is ongoing.”

• Council voted 7-0 to suspend the three-reading rule and to approve and adopt an emergency resolution to authorize and accept $85,000 in community development block grant (CDBG) funds.

“This legislation will allow the city to accept a CDBG funds from the state for a revolving loan fund application received by our revolving loan fund board,” Abbott told council.

• Council voted 7-0 to approve and adopt a resolution authorizing the Safety and Service Director to enter into an easement agreement with AEP on real property owned by the City of Hillsboro, following the legislation’s third reading.

According to the resolution, “AEP desires an easement for electric and other current/future energy or communication purposes, overhead and underground, in, on, over, through and across” land owned by the city on West Street. AEP is to pay the city $3,610 for the easement, the legislation says.  

• An ordinance amending section 39.35 of the codified ordinances of the City of Hillsboro pertaining to the disposition of human remains was approved, 7-0, after its third reading.

The legislation is to “mirror” Section 9.15 of the Ohio Revised Code regarding “burial or cremation of [a] body at [the] expense of [a] township or municipal corporation.”

Council also heard the second reading of two pieces of legislation:

• An ordinance amending section 36.056 and repealing section 36.052 of the codified ordinances of the City of Hillsboro pertaining to petty cash and change funds; and

• A resolution adopting a new fixed asset policy for the City of Hillsboro.

For more from Thursday's meeting, go to: https://highlandcountypress.com/hillsboro-city-council-hears-proposed-s….