Litchfield City Council received good financial news Monday as it approved the sale of $3.875 million in sewer revenue and refunding bonds.
Shelly Eldridge of Ehlers & Associates, the city’s financial adviser, told the Council that its AA-minus rating saved the city and taxpayers thousands of dollars in the bond sale.
Six financial institutions bid on the bonds, Eldridge said, which is the most bidders on a city bond in recent memory.
“It was good,” Eldridge said. “It was really good.”
Piper Jaffray was the winning bidder with a 1.8918 percent bid, in what was a competitive bidding process that saw the highest offer at just 2.0079 percent.
Eldridge congratulated the City Council on the city’s AA-minus rating, giving credit to the administration for its work to satisfactorily answer all of rating company Standard & Poor’s questions.
That rating will remain for the next two years, Eldridge said, barring significant changes to the city’s profile, such as it taking on additional debt or a major economic downturn.
Councilor Ron Dingmann later asked for additional explanation of the city’s rating and the factors that affect it.
“What kind of additional debt would jeopardize that (rating)?” Dingmann asked.
“If you needed to build a Taj Mahal city hall …” Eldridge answered. Or if the city issued $15 million to $20 million in new debt in the next two to three years, it probably would want to work with Ehlers & Associates to explain its profile better to Standard & Poor if it hoped to maintain its AA-minus rating.
Eldridge also said that the city’s diversified tax base also has been beneficial in the past when it comes to financial ratings.
“While everyone else was taking, Litchfield was not,” she said.
The city also will use $315,000 in its debt service fund to pay off outstanding bonds from 2011 that have maturity dates ranging from 2021 to 2021.
A mammoth expansion announced last week will create 200 jobs at Doosan Bobcat’s Litchfield manufacturing facility.
The $26 million investment plan follows an increasing demand for Bobcat to grow its line of compact equipment and attachments, according to company news release. Bobcat officials boasted during a commemorative event to announce the expansion that significant economic advantage will emerge once the project is complete and operational.
“This facility is going to be the largest attachment facility that we have in all of Doosan Bobcat,” said Scott Park, president and chief executive officer of Doosan Bobcat. “So we’ll have a lot of new attachments coming out of here. We’re going to be developing — actually creating more attachments to be able to make our products even more productive, and having this facility will enable us to expand that portfolio.”
The Litchfield Bobcat facility produces buckets, augers, snowplows and other attachments that go on Bobcat excavators and loaders sold throughout North America.
“It’s really, really important that Litchfield is a town that’s been picked by a global leader like Bobcat,” Mayor Keith Johnson said, “to come out here and expand in a huge way. And to bring so many new employees to our community. Not only does our town benefit, but Meeker County, McLeod County, Kandiyohi County and Stearns County benefit.”
Before Park’s arrival in Litchfield, he visited Minneapolis for the opening of the company’s $2 million Global Collaboration Center, which will be under the supervision of Alvaro Pacini, former president of Doosan Bobcat’s Europe markets.
The Litchfield construction is underway, with completion expected by September 2020. The project will modernize the production facility — adding new paint lines, a climate-controlled environment, assembly line upgrades and other features. The project will triple the size of the facility from 60,000 to 200,000 square feet.
“One of the things that I talked about was the ‘global leader and compact’ that’s our vision,” Park said. “Our vision is that in the next five years that the global business reaches over $7 billion. And a big component of that is attachments, because not only is it a big component from a revenue perspective, but that’s what differentiates our products. We have more optimized attachments than any of our competitors. So that’s what allows our customers to have a high usage of our products.”
Bobcat officials hope to draw workers from a radius of about 45 miles of Litchfield, said Mike Ballweber, president of Doosan Bobcat North America.
“And we have some examples in some of our other facilities where we’ve been able to do that,” Ballweber said. “You’re starting to touch on the edge of St. Cloud and some of those surrounding areas that we can draw on — having people come and work here.”
Doosan Bobcat has been continuing to grow, Ballweber said, “really, since the last recession, we’ve been in a pure growth mode.”
The Litchfield expansion project will include additions to blue-collar and white-collar positions, Ballweber said.
“We are going to put new assembly lines in,” he said. “So there’ll certainly be new equipment, whether it’s lasers, brake presses and a paint line; and with that will come jobs. We’ll need additional manufacturing engineers.”
Ballweber said the Litchfield facility expansion project will need the support of the community in terms of developing more housing options, childcare facilities and others for sustaining a growing workforce.
There’s compatibility between the Minnesotan culture and the global Doosan Bobcat culture, Park said.
“It’s talking about hard work,” he said. “It’s talking about loyalty. It’s talking about care. And it’s that whole family atmosphere. This is what we get here, and this is the type of culture and the feel that we try to keep throughout the global organization.”
As one problem snowballs into another, Minnesota farmers, propane dealers and many residents are caught in a balancing act.
A wet spring pushed planting back further than usual and harvest to late October and November. With moisture levels breaking records in Minnesota this year, farmers need more propane to dry crops, and unseasonably cold weather more than 10 degrees lower than usual makes the demand all the higher. Meanwhile, propane is needed to heat homes and barns more than usual as low temperatures matched or beat records around the state following a recent cold snap.
Temperatures were consistently below freezing in in the region through midweek last week, according to the National Weather Service.
Brian Thalmann, a Plato farmer and past president of the Minnesota Corn Growers Association Board, said propane is usually used to bring moisture levels down in corn from the high teens to the lower teens. He’s heard reports this harvest of moisture levels in the mid 20s.
While some fear the possibility of propane outages in the state, Mike Conner of the Hutchinson Co-op says the propane dealer is making it work by putting in more hours, making more trips and making sure everyone has just enough to get by.
“I don’t think we’re going to let people get cold,” he said. “We’re rationing it.”
Thalmann said farmers expect they may have to continue waiting a few more weeks to finish harvest.
“There has been a slowdown in harvest for a lot of people,” he said.
Russell Rueckert, operations manager for Litchfield Oil & Propane, said he was out of propane for a day last week. The company houses two 30,000-gallon and two 18,000-gallon propane tanks. Currently, one of the 30,000-gallon tanks and an 18,000-gallon tank are empty.
“I believe at this moment we have 10 percent in the 30,000-gallon tank,” Rueckert said Monday. “If we don’t get more, that’ll be gone by the end of the day.”
To ensure he has enough propane for drying his crops, Tom Haag’s supplier has had to travel to states as far away as North Carolina. But for the most part Haag, who operates a 1,600 acres of soybean and corn farmland in the Eden Valley area, has been lucky.
“As of right now, we have been able to get enough propane to continue to stay dry,” Haag, board member for the Minnesota Corn Growers Association, said Monday. “But I know it has affected some other areas in the state and in other states. They were there this morning to fill us up again. So things are getting a little better, but it’s still tight.”
Minnesota isn’t the only Midwest state facing a propane shortage, leading governors to issue orders lifting shipping regulations. Minnesota Gov. Tim Walz made such a declaration Oct. 30, hoping to allow drivers and carriers to haul more propane where it is needed.
“This has been a stressful year for Minnesota farmers,” Walz said. “The recent wet weather has only exacerbated these challenges to create the unprecedented crisis we now face, with crops sitting unharvested in soaked fields and truckloads of product that can’t be brought to market.”
The Minnesota Propane Association reported shipping record amounts of propane so far this November. Usually 190 loads of propane are shipped per day. This year, that amount is up to nearly 300.
“We are warming up 2-degree corn and 2-degree air to 200 degrees,” Conner of Hutchinson Co-op said. “Normally when this is done the second week of October, we have ambient air of about 60 degrees, and have corn at about 60 degrees. It takes up to 25 percent more (propane) to do the same job.”
But the problem, he said, has many more facets.
In 2014, pipeline operator Kinder Morgan halted propane shipments from Canada to Minnesota to ship a new product after 35 years of delivery to terminals in Benson. The pipeline hauled 40 percent of the state’s propane, and the change put a greater emphasis on other delivery methods, namely by train.
“They bring propane by rail cars and unload,” Conner said. “That becomes the major distribution points for companies like (Hutchinson Co-op).”
The closest is Rockville, which is west of St. Cloud.
“Even when those rail terminals work at peak efficiency, it’s like a hundredth of what you can push through a pipeline,” Conner said. “There is a limit to how many rail cars you can load in a day. So on years like this, the system is always going to have a breakdown. We can’t replace those lost gallons.”
Trucks driving further to St. Paul, Mankato or Benson to load propane from pipelines have other problems to deal with as well. Nebraska and Iowa are ahead of Minnesota on pipelines, and those states have had record fall yields.
“They are taking all the gas,” Conner said. “The pipe for the past week has been operating slowly on line pressure. There is very little gas making it up.”
He said that under the best conditions, each location might be able to fill six trucks in an hour. Now, two terminals might collectively fill four or five in an hour. Meanwhile, trucks from businesses that sell primarily for home use and agriculture use compete for a place in line.
Timing has added to the tension of competing needs.
“Moneys for fuel assistance are not released until Nov. 1 each year, so it creates another ‘harvest,’” Conner said. “It’s filling homes of low-income people that have been waiting probably with near empty tanks or empty tanks for assistance to kick in. Normally you don’t have that overlap. Normally corn harvest is wrapped up by Halloween.”
Hutchinson Co-op is anticipating another few weeks of continued high demand between agricultural needs, and the need to stay on top of dangerous overnight temperatures. In the meantime, it is keeping careful track of propane in each tank it services, and instead of filling the tanks it makes sure to resupply enough to maintain each need. But that approach takes more trips and more work.
“Each trip costs us money,” Conner said. “It costs us man hours, it costs us fuel, wear and tear. So there is going to be an efficiency drain on a small dealer like Hutchinson Co-op. … We are effectively filling their daily consumption, we are keeping them running.”
For many farmers, the shortage is just one more problem added onto a year of uncooperative weather, low commodity prices and rising costs.
“Every time we turn around there is another problem or trade or markets,” Thalmann said. “It’s one hit after another.”
— Sarv Mithaqiyan contributed to this story.