December 29, 2008 Council Meeting

We had a short council meeting on Monday that had two issues on the agenda. The first issue was approval of end of year bills. The second issue was approval of the contract with the Humane Society for 2009. Buhl’s attorney wanted to clear up a few items in the contract with the Humane Society from the Dec 16 meeting. The Humane Society agreed to the changes, so we approved the contract for 2009.

One thing that I did talk to Buhl’s Clerk about was the Local Government Aid (LGA) that we received from the State of MN on December 26. Buhl’s total aid was not decreased in 2008 like some other cities were. We did not receive a decrease because we are considered a small city (under 1000 people), and the State did not reduce small city’s aid for 2008. Most likely, our aid for 2009 will be reduced.

How will we reduce our spending in 2009, based on the reduction of LGA we receive? It is hard to say at this point, because we don’t know what the reduced amount will be. We now receive $346,139 a year from the State in LGA. That amount will most likely decrease next year, and we will need to find some things to cut, or raise the local levy, or both.

A few people have made suggestions on possible ways to balance the City budget for 2009. The suggestions were…. Cut the law enforcement…..close the library……cut one employee from the City Crew…..cut the recreation department out. These were suggestions made to me (interesting that no one said “raise the local levy”). Let me know what your suggestions are on possible ways to balance the City budget for next year.

December 16, 2008 Council Meeting

Dec 16 2008 meeting took about 40 minutes from start to finish. These are my comments on the meeting.

Gene spoke for Public works, and briefly talked about snow plowing. They have done a good job this year. I mentioned to Gene that a home owner on Seville told me that his power was low in his house. Normal is about 120 volts, and the home owner has been measuring as low as 102 volts. Gene said that they are aware of the problem and are working on it with the home owner.

Shari spoke for the Library Board, and said that the “Finest of Times” is out. There is a Christmas Oragami class December 17 at 4pm, the 28th annual Christmas Party is at the library December 20 at 2:15pm, and the library is showing movies at 2pm December 29, 30 and 31. All movies are rated PG. Also, the library has a new online book club that had over 500 visits last month.

The first order of business was a resolution in support of the Polymet Mining project. The resolution was approved 3-0, with Shari and myself abstaining. I own some stock in Polymet (apparently so does Shari), and I thought that it would be unethical to ask the State Legislature to support the project when I could get some (very small) financial gain.

Next was a resolution approving the results of the City of Buhl recount. The resolution passed 4-0, with an abstain vote from me. Since the recount was due to a very close vote involving me, I did not think it was right for me to vote on the resolution.

We had a brief discussion of the Sheriff’s contract for Buhl. The Mayor and City Clerk gave our issues to the representatives of the Sheriff, and he hasn’t gotten back to us yet.

Next we talked about future bonding projects for the City. The City Clerk (Mike) thought that it would be best to not go forward with any bonding projects right now. Mike told us that it is possible that the State of MN could cut our 2008 Local Government Aid (LGA) by $8000-50,000. Next year will be (most likely) a lot bigger cut. So, Mike thought that it would be best to hold off on any new bonding/spending until we get a good idea of how much money we will get in LGA. The council agreed.

We transferred $24,933.59 from the sewer savings account to the general checking account sewer fund to pay some sewer bills.

We reviewed the new Waste Management contract, and Buhl’s Attorney (Al) asked us to hold off on agreeing to the new contract. Al wants clarification of some of the language in the new contract. The council agreed to hold off on approving the contract.

We reviewed the new Mesabi Humane Society contract. Al again asked that we hold off approving the contract due to some issues that were unclear. The biggest issue Al has is with a “Release of Liability” statement in the contract that he believes would release Mesabi Humane Society from liability in their work and put their liability on the City of Buhl. Al will get this issued cleared up, and the council tabled it for now.

We paid a bill of $1154 to Gobel Excavating for work at the assisted living facility.

We paid $416.01 to RLK for services on the Buhl Stubler Pit Project.

We paid $632.32 to RLK for services on the State Street Area Utility Improvements.

We paid $168.75 to RLK for services on the Damiens Addition Drainage Improvements.

We paid $4705 to RLK for services on the East Monroe Street.

We then set up a special council meeting for December 29, 2008 at 5:30pm so that we can pay 2008 bills before 2009 gets here.

We agreed to send Gene P. to the MRWA Water/Wastewater Technical Conference in St Cloud. Gene needs this training to keep his license up to date.

We agreed to spend $34,897 from Mining Effects money for the Damian Addition Drainage Project. We had agreed to do this earlier in the year, but had not made the motion yet.

We agreed to spend the remaining 2008 Mining Effects money on the Water/Sewer Project that the City did in 2008. That remaining amount of money was $2709.

We agreed to have Sterle & Co. do the 2008 audit for the City of Buhl at a cost of $7150. Last year the cost was $6950.

After the meeting I spoke with Al (City Attorney) about the ambulance aid agreement with the City of Kinney. He is waiting (like the rest of us) for the City of Kinney to let our City Clerk know when we can have a meeting on this issue. The meeting should have every interested party involved so that we can finally hammer out the agreement.

That’s it for December 16, 2009.

Stubler mistake

The Stubler Pit project is the biggest mistake the City Council made in my first 4 ½ years on the council and is the worst waste of money that I have ever been involved with. The project was the Mayor’s idea, and in my opinion was a bad idea from the start. In my post on the South Industrial Park, I wrote about public –vs- private developments. Stubler would have been a great private development project. As a public development, it is a disaster.

The project was set up as the choice between four different public development scenarios. Really, the choice was between two different projects. One that had an initial cost of $459,000, and one with an initial cost of $192,000.

Project #1 had an initial cost of $459,000 and was 19 lots on the north and east side of Stubler. The project included water, sewer, electric and roads. This is the project that the city council voted for. Now that the project is done, we can add the additional costs and subtract all of the grant money that we have received. The total cost of the project came to $595,193. Discounting the grants that Buhl received for this project ($250,000), the project cost Buhl taxpayers $345,193 up front. That is out of the Buhl’s taxpayers pockets.

Project #2 had an initial cost of $192,000 and was 15 lots on the north side of Stubler. This project would have included water, sewer, electric and roads. If we would have selected this project, we would now have 15 lots ready for development. The total cost of the project would have been @$290,000. Discounting the grants that Buhl received for this project ($250,000), the project would have cost Buhl taxpayers $40,000 up front.

Simple math. We built 4 extra lots (nice lots fairly near the water) for an additional $305,000. That was your money. If the houses stand for 100 years, we will not recoup the tax dollars spent on those 4 extra lots. That is IF we can sell the lots. Let’s talk about that.

Using public money for new development is a risk, one I am usually not ready to take. The risk in this project was (and is), can we sell the lots? We have so far sold 1 of the 19. There are good real estate markets, and there are bad ones. Then there is the real estate market we are in now, which is the worst in 70 years. That was part of the risk, and we lost on that one.

The argument I get for doing the 19 lots is “when we sell all the lots, the project will be paid for”. The estimate is we will make a “profit” of $93,000 when we sell the 19 lots. Using the same cost basis, I estimate that we would have made a profit of $185,000 if we would have only built 15 lots.

When will we sell those lots? Will we get enough from them to offset the project? What about the projects we can’t do now because we spent $345,193 on Stubler when we really needed to do infrastructure projects in the older parts of Buhl? Now we don’t have the money to do those projects. The answer from the council members that supported Stubler is “lets bond for infrastructure”.

UGHHHH! The Stubler Pit Project is a near calamity for Buhl. Buhl doesn’t have a big tax base, and we don’t have a big budget. We must do small projects that we can afford, not take huge bites and gorge ourselves on projects that we will be paying on for years to come.

The State of Minnesota now says that there is a $5.2 billion budget deficit for the next two years. I think that they will cut our local government aid because of the deficit, and I think the cut could be up to $100,000. If we need another $100,000 from Buhl taxpayers in 2010, how will we get it? Maybe we will have to cut at least one fulltime employee. Or maybe we just close the library. There will some kinds of major cuts if our local government aid gets a big cut. And forget about any new infrastructure projects.

What if we still had that $345,193 in the bank? At 3.5% interest, that’s $12,000 a year in interest we have lost.

I hate the stock market right now because I have lost some money in it. But putting money in the stock market was my risk to take. The Stubler Pit project was a risk the City Council took with your money. We should not have done it, and now you will pay the cost out of your pocket.

$595,193 for 19 lots, $290,000 for 15 lots. A profit of $93,000 for 19 lots, or $185,000 for 15 lots. $345,193 up front for 19 lots, or $40,000 up front for 15 lots.

This post has a lot of information, and a lot of dollar values for you to swallow. It took me a while to put it together, so read it a couple of times, and please let me know what you think.

Chris

If the December 2 meeting seemed long to you watching on local cable, you should have been there. We had only one real long discussion, and one other short contentious issue. During these council meeting posts, I’ll try to review the whole meeting.


John Markas began the meeting speaking for Public Works. He mentioned that there will be a sewer rate increase proposal, but it was not ready for this meeting (John spoke again at the end of the meeting).


There was another discussion on the ambulance joint powers/mutual aid agreement with Kinney. Concerned Taxpayer commented on this in my Nov 18 meeting post. It was decided that the Buhl Clerk would set up a meeting with the Buhl lawyer, Kinney lawyer and the other concerned parties (hopefully the ambulance crew), and this issue will get hammered out. The major sticking points are hazy to me, but seem to be all about insurance and possible litigation if there is an accident or incident involving the ambulance crew. This will get finalized.


The Recreation Board decided on the holiday lighting contest, which will be held one night during the week of December 15. The council also okayed the skating crew for the winter, along with their wages. This year there will be a supervisor for the skating crew, other than just a member of the Recreation Board. There was a discussion on who the supervisor would be, with Councilor Swanson voting nay on the hiring of the supervisor.


The first order of business was a longggg discussion on a change to the Buhl code of ordinances. The new ordinance requires all utility billings to be in the name of the property owner. The previous ordinance allowed renters to have the utilities in their names. Two Buhl property owners spoke (one a current landlord, one a past landlord), and both spoke out against the new ordinance. Their main point of contention was that they should not be responsible for a bill that renters create. They argued that the renters used Buhl services, and therefore should be billed for those services. Initially it sounds like a valid point. However, there have been numerous times that renters run up a utility bill, and then leave town without paying that bill. At this time, past renters owe the City of Buhl over $3800.


This is where it gets tough. The State of Minnesota has a law forbidding cities from collecting past due electrical payments from landlords. That means we cannot collect on past due bills, and have to eat the loss. If the State did not tie our hands, then we would not have had to pass a new ordinance. We would just collect from landlords. Instead, we will now treat all property owners the same, and utility bills will be in the property owner’s name.


This will take the burden of collecting delinquent utility bills off of Buhl, and put in on the landlords where I think it belongs. Really, Buhl should not be at risk of loosing money simply because someone rents a home or apartment. The risk should be with the business, not the City. The landlord owns the business, and should own the risk.


Councilor Swanson and Mayor Pulford voted against the new ordinance. Both thought that we could have tried a less extreme step, like increasing deposits for utilities. That is a reasonable step, but would still leave open the possibility that a renter could leave town and leave an unpaid bill for Buhl taxpayers. I believe that we chose the correct solution. What do you think?
Next we adopted a budget for fiscal 2009 of $850,803, an increase of $3000 from last year (about 1/2 %)


Then we set the levy for fiscal 2009 at $256,000. This is an increase of about 4.5%. Since the total value of properties in Buhl increased by about 8%, the Buhl portion of property taxes should remain very stable. However, Buhl does not control the County levy, or the School District portion. We also cannot do anything about a homeowners property value, which the County controls. We can only set the City levy, and it will be very near the same in 2009 as it was in 2008.


We approved a grant that the fire department received from the DNR for $1500. This grant will be used for new radios.


We received the latest financial report for the Stubler Pit project. My next post will go into this in detail.


We transferred 2008 leftover money to Capital funds. This is a normal end of year transfer that takes any money that wasn’t spent in the previous year and puts it towards future capital expenditures. For instance, if the City needs a new dump truck, we would get part (or all) of that money from the capital funds that we set aside.


We paid a change order on the Stubler Pit project of $43.05.


We paid Hammerlund Construction $3680.30 for work completed on the Stubler Pit project.


We paid Jola and Sopp $3952 for work completed on East Monroe Drive.


We approved costs for new City Council members to go to a leadership conference in Nisswa. This conference is put on by the League of Minnesota Cities, and is only for newly elected officials.


We approved a one month note for the Northland Village. This is basically an extension of the previous note to the American Bank of the North that we had already made. The construction is about a month behind, so the Bank required an extension of the interest only note. This is at no cost to Buhl, and Northland Village will open in January instead of December.


Then John Markas talked about getting phone lines to our lift stations in Buhl, so that if a lift station failed there would be an automatic callout of the City Crew to fix it. He also said that we needed some power line upgrades, and MPL would be giving us an estimate soon.


Finally, John told us about the power lines at Stubler that the City recently purchased. I voted no on the purchase of these lines (a couple of meetings ago), because they cost the City $11,000. In my opinion, we paid to own power lines that we didn’t want or need. John came this time to explain that the lines were installed by MPL at a cost of $35,000, but MPL was willing to waive that cost if we purchased the lines for $11,000. Easy figuring there. If I had understood that at the previous meeting, I would have voted to buy the lines.


That was a lot of typing for me. I hope you could follow it. Let me know what you think.


Chris

Not so good way to develop in Buhl. The South Industrial Park

Since I’ve been on the city council, we have completed two large and one small public financed developments. There are many reasons that I did not support those projects. It wasn’t the idea of new development in Buhl that I was against, it was how the projects were executed that I did not support. I want to be clear….it is only on the rare occasion that the City of Buhl should ever do public financed development projects for new developments. In my opinion, development is best done by private individuals. Buhl should support, encourage and even assist in these developments, but we should not risk taxpayers dollars in new development projects. Let private individuals risk their money. That is what private developers do. If they lose their money, that is their risk. When they make money, that is the reward. I am not saying that we should never do new development projects, just rarely.

Let’s start with the first project. The Buhl south industrial park was the Mayor’s idea, and it is a good one. Having a place outside of Buhl, right off of HWY 169 that allows for industrial and light industrial development is good for Buhl. The problem was that the tenant that the project was built around is a non-profit business. The space for the industrial park that the City owns south of HWY 169 is limited, and the best spot in the industrial park is @14 acres on the west side of the park. The project called for selling those 14 acres to the non-profit for $14,000, and then spending @$125,000 of Buhl taxpayers money (not to mention the $180,000 of grant money) to put in infrastructure. All of that spending for a company that will NEVER pay taxes.

Buhl gets money in two ways. We receive money from outside sources such as the State of MN, Federal grants and loans, IRRB grants and loans….etc. Outside sources. Or we can tax the citizens of Buhl for money, our local levy. We received about $200,000 from the local levy the year we put in the South Industrial Park. It was ridiculous to use Buhl taxpayer dollars to pay $125,000 in infrastructure for a company that will never pay taxes.

Now, I would have supported the project if was handled in a different way. It could have been a private development, which I would most likely have supported. It could have been a public (Buhl financed) project that had a large tenant that would pay taxes right away, and I would most likely have supported that. But to use public money and basically give away prime property to a company that will never repay that money in tax revenue is a blunder.

I have no problems with non-profit companies. They do the good things for all of us that most businesses won’t do. However, we need to grow our tax base and non-profit companies do not help with that. Let me know what you think.

Good way to develop in Buhl

An example of a good development for Buhl is the new assisted living facility, Northland Village, located on East Monroe Drive. Northland Foundation asked the City of Buhl to help them with the project. We helped with the grants, we made sure that the city’s engineers were used for oversight on the project, we even backed Northland Foundation's request for a loan from the bank.

Now the project is nearing completion and it is a huge success for Buhl. First, it did not cost the local taxpayers any money. Second, we have a large new assisted living facility in Buhl for our residents. Third, Northland Village will pay taxes, which increases the tax base of the city and helps to hold down the taxes of everyone in the city. This is a great example of how to do new development projects in Buhl.

Let me know what you think of the new assisted living facility in Buhl.

Nov 18, 2008 Buhl meeting

The Nov 18 meeting finished up the 2009 budget, and set the final levy for the City of Buhl. This meeting started early, 5:30pm so that Buhl could have Sheriff Ross Litman at the meeting to review our contract with the county for services.

Sheriff Litman gave us a copy of a draft contract for 2009 services. Buhl contracts with St Louis County for 40 hours of on site deputy service in the city. We also have an agreement with the City of Kinney to share some of the costs. Sheriff Litman shared his thoughts on the contract, and we tried to get the total cost of the contract. This was a difficult thing to do, since some of the costs are not permanently set. Such as the Deputy's salary, which depends on the level of the pay of the deputy that serves Buhl. Also the health insurance costs aren't set, since we won't always know if the deputy has single or family coverage. So, we did the best we could and came up with a number of $90,000 for the 2009 budget. I believe that the cost will be closer to $75,000, but we won't know until the end of 2009.

At some point in the near future, the city will have to decide if we can still afford coverage, or if we should just go with 911 calls and normal sheriff patrols. I haven't made up my mind on this yet, because so much is dependent on the funds that are available. If we can afford the deputy service, I think that we should have it. I'm not sure we can continue to afford it.

We next talked about the library, which is a constant debate within the council of how much we should spend and who has control over the spending. At the previous meeting, we sent the library board back to the drawing board on their budget request, and asked them to cut their request. They did, down @$6,000 to $80,956 with an additional $5,000 for capital expenses.

Again, we will have to decide in the future if a library is in Buhl's future. Our total budget for 2008 was $847,000. Of that, $85,000 went to the library. That is about 10% of our budget. The library is not a core function of the city, so it is a sore spot for some people that don't want their tax dollars spent on non-core services. I think that what we offer outside of core services is what makes our city attractive to homeowners and businesses. So, at this point in time I am all for the library, and will support the spending needed to keep it open. But, as one councilor said during the meeting, the library needs to be more innovative in it's business. What he means (I think) is that they need to find other sources of revenue, and stop asking for more money every year. At some point, even I will have to say no.

After the Library budget being set at $80,956 (with $5,000 more for capital), we had to set the levy for 2009. After some brief discussions, we decided on $856,000, an increase of 4.5% from 2008. We had a short discussion on past spending and future project spending, and where that money will come from. I will discuss that in another post soon.

We then approved a grant from IRRB for $200,000 for the reconstruction of Frantz Street.

We paid for the paving at the new assisted living facility in Buhl. $40,000 was spent out of money received in a grant for the job.

We spent $4,000 for engineering work for the assisted living facility, again from a IRRB grant.

We renewed licenses for businesses in town.

We reviewed a new utility ordinance, and took no action.

We agreed to pay the Buhl building inspector a retainer of $150/month for services. This agreement is instead of an hourly rate. Our city clerk believes that this is a good deal, and that the building inspector gives us much more service than the $150/month if set at an hourly rate. Our city clerk is a smart guy, so I agreed to the retainer. However, we will review the retainer fee at a later date to see if it is costing the City too much, and if we should then raise our building permit fees.

We sent a letter to the Secretary of Energy to support the Excelsior Energy Mesabe Energy Project.

We voted against providing any money for the Chisholm, Balkan & Buhl Rec Program. Over the years, we felt that the usage of this program by Buhl residents had diminished to a point where it was no longer worth the cost.

We allowed the City offices to be closed on Dec 26, 2008. Each employee will take a personal day or take vacation for the day.

Well, that was a lot for my first post of a meeting. One of our councilors writes for a newspaper, so his writing would be very good. Mine, not so much. Let me know what you think.

Blog Reason

I have been a member of the Buhl City Council for 4 1/2 years. In that time, I have found it difficult to express my thoughts and ideas to Buhl Citizens for a variety of reasons. I work outside of Buhl, and don't get to spend a lot of time in town during the day. All of the other members of the council work in Buhl, or are retired, so they find more opportunities to speak to individuals during the day.

I also don't have a family history in town, and haven't really known the people of Buhl for very long. My wife grew up in Buhl, and her family has deep roots here. We have been married for 20 years, so we have visited town often over the years. But we moved here just 5 1/2 years ago, so my own roots aren't deep, and in a small town time makes for familiarity between people.

So, I thought that I would try another way to speak to the citizens of Buhl. This blog will cover the City Council meetings. I will review the meetings, go over the issues we debated and give outcomes of our debates. I will also give my thoughts on these issues, and tell why I voted the way I did, and the reasons for my thoughts on these issues.

I invite anyone that reads my blog to leave their thoughts. However, please be polite. Each member of the Buhl City Council tries to do their personal best for the City. We don't always agree, and occasionally we argue, but we are always respectful of each other. I commit to be respectful in this blog, and I insist that any feedback be respectful too.

Disagreement is fine. Our rights to free speech are rooted in our rights to free political speech, and I won't stop that here. But free speech does not mean the freedom to say anything at anytime. Disagreement yes, but I won't allow personal attacks. So, be polite.