Lakeville Wants to Borrow $88 Million Next Year Here's What It's Buying

TLDR

• Lakeville's draft five-year construction plan calls for about $88 million in bonding in 2027.
• Three big pieces: $20M Fire Station 3, $26M maintenance facility expansion, $35M water treatment plant.
• Only the maintenance facility hits your property tax levy. The other two get paid back other ways.
• Staff says the city's AAA bond rating is not at risk. About $16 million of old debt drops off each of the next four years.

Lakeville's City Council got its first full look Tuesday night at the draft capital improvement plan covering 2027 through 2031. It's the document that lays out every road, park, building, and utility project the city intends to build — and how it plans to pay for them.

Finance Director Stahl opened the money slide with a warning: "Don't freak out."

She meant the $88 million.

What the $88 million actually buys

The 2027 bonding breaks into four buckets.

Fire Station 3 — $20 million. This is not the station going up on Dodd Boulevard right now. That one is the new consolidated Station 2 at 17624 Dodd, which merges the old Stations 2 and 4 into a single building. Station 3 is the 5,341-square-foot station built in 1988 at 17490 Kenrick Avenue, and the agenda packet says feasibility work landed on full replacement as the more cost-effective option over renovating and expanding it.

The bonds for it do not hit your property tax levy — they get repaid with franchise fee revenue, the fee already built into your utility bills. The council also approved the design contract on Tuesday's consent agenda: $996,875 to Leo A. Daly Architects, picked from seven proposals and three finalist interviews, also paid from franchise fees. The five-year plan carries another $3.5 million for the station in 2028, bringing it to $23.5 million total.

Central maintenance facility expansion — $26 million. This is the one that lands on the levy, and staff named it as the single largest driver of the coming debt spike. The city has outgrown the space where it stores plows, mowers, and fleet equipment. As Stahl put it, "we are really packed in there right now."

Satellite water treatment facility — $35 million. Going in near Dodd and Cedar. Lakeville has been expanding water treatment capacity alongside its population for years. These are utility revenue bonds, repaid through your water and sewer rates rather than property taxes. The city is also transferring $9 million from the water operating fund, so it isn't bonding the full cost.

Street reconstruction and collector roadways — the normal annual amount the city bonds every year.

Council Member Joshua Lee asked whether flipping the order of the water projects might soften the peak. Staff clarified that the 2030 water treatment item is maintenance and a garage expansion, not a second plant — so there's no swap to make.

Does this threaten the AAA rating?

Council Member Michelle Volk asked it directly: does a number this large put the city's triple-A bond rating in jeopardy?

Stahl's answer was no, for a few reasons.

First, none of this is a surprise. The maintenance facility has been in the long-range plan for years. The city works with financial advisors at Northland to spread the impact out, and they're updating that long-term plan this year with current cost projections.

Second, old debt is falling off fast. Roughly $16 million of existing city debt expires each of the next four years. The new borrowing is partly backfilling a hole that was opening anyway.

Third — and this surprised the council — a bigger bond issue is actually easier to sell. Lakeville normally issues $20 to $30 million and gets 13 or 14 bids. An $88 million issue draws a wider pool of institutional buyers.

That's where Volk pushed back with the honest question of the night. If a bigger issue attracts more buyers, why was staff also saying the number might shrink? "Well, that, to me... I don't know, it's just my little brain. You kinda contradicted yourself."

The answer: $88 million and $86 million are both far bigger than Lakeville's normal issue. Either way, it draws a crowd. And the city may not need to issue all of it in 2027 if franchise fee revenue can front-end part of the work.

What else is in the five-year plan

Beyond 2027, the draft plan lays out a genuinely busy stretch.

Buildings: Fire Station 1 renovation at $20.5 million, with construction in 2028. Police station improvements. Additional water treatment facility work.

Utilities: Municipal wells 24 and 25 in 2028, adding supply capacity and redundancy. Fairfield Water Tower maintenance in 2030.

Parks: The Klamath Trail retaining wall. Ritter Meadows Park in 2028. Two new parks in 2030 and 2031 that follow development. Plus the projects already under construction — the Lake Marion Greenway, East Community Park phase two, and Voyager Park next year. Residents told the city what they wanted out of the park system last year, and this is where that shows up.

Roads: The city posts its active construction projects as they start. Annual pavement management and local street rehabilitation every year, plus the Dodd Boulevard modernization in 2027 and 2028, the I-35 interchange at County Road 50 in 2029–2030, Dodd corridor work at 190th and 194th in 2029, and an expansion of Lakeville Boulevard east of Cedar tied to anticipated development.

Also on the list: the freight rail car storage facility, bidding in April 2027.

The Bottom Line

Nothing was voted on Tuesday. This was a work session — the first public look at the draft.

Here's the schedule from here. The Planning Commission reviews the CIP on Thursday, Sept. 17, checking that it lines up with the city's comprehensive land use plan. If that clears, the council adopts it in October. Dakota County releases its own draft capital plan in October and has asked Lakeville for a resolution of support at the first council meeting in November.

If you want a say in what gets built and when, those are the meetings.

City Engineer Zach Johnson summed up the whole document in one line: the priority is "taking care of what we have, planning for Lakeville's growth, and investing responsibly in the infrastructure that keeps our city running."