January 6, 2009 Council Meeting

Well, not much happened at the last meeting. Jessie White wrote it up at his blog here http://buhlcouncilorjessewhite.blogspot.com/2009/01/jan-6-2009-city-council-meeting.html

The thing at the meeting that was not just bills and housekeeping was the snowblower for the rec department. Early in the meeting Gene P. spoke about the current snowblower that the rec department has for the hockey rinks. That snowblower was broken (not the first time), and Gene told us that the sewer plant had an extra one that the rec department could use while the regular snowblower was fixed. In the end , we voted to buy a new snowblower from Sears, a 33 inch Craftsman Professional for $1799.99. A lot of money spent at a time when we are trying to cut back.

Initially, I was not going to vote for a new blower. The more that I thought about it, and the more Jill from the rec department talked about the old blower, the more I changed my mind. My thought on this was the old "right tool for the right job". The old blower did not get the job done, and it takes a lot of man power to shovel out all that snow. Extra man power means extra people working at $7.00-$8.00/ hour. Two or three extra people 7-8 times a year and that turns into real money. Plus, the old snowblower just isn't made for cleaning that much snow. That was my thought process during the discussion. More staffing = more money in wages.

Besides the snowblower, the only other thing that I am really looking for input on is the Buhl Economic Development Agency (BEDA) that Jesse, Tom H. and myself were named to. I have been on BEDA for 4 years now, and I find it a difficult board to be on. Really, every person on the board tries hard, but we are all amateurs at economic development. The question is.... what is the best way to get some new businesses into Buhl? We have some land to sell, we have the South Industrial Park to fill up and the Whiteside Industrial Park too. We also have some commercial property in the City, but finding businesses to come to Buhl is not easy.

I thought that BEDA could offer financial incentives to people to find businesses that would come (and stay) in Buhl, sort of a "finder's fee". Say you were to find a business that would move to Buhl, that business came to BEDA and we were able to find them a building or building site, and the business stayed in Buhl for 1 year. Maybe BEDA could pay a finder's fee to the person that brought the business to BEDA. What, maybe $1000.00? It couldn't be a home business, and it would have to stay open in Buhl for some specified amount of time (no finder's fees to members of the City Council).

I could use some ideas here. What do you think?

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.