April 17th Council Update

We had several tough votes last night. The 2006 street assessment challenge, liquor store expansion vs. new store and the street number east of 65. We also reviewed or City Audit report. The parking in residential zones was pulled from the agenda because our City Attorney had not been able to review the proposed ordinance in time.

The Council voted to use last year’s assessment amounts for the challenging property owners. We based this decision on an appraisal of the property. The Council is bound by expert opinion in these matters otherwise there is no consistency in our decision making process. If we change the process and cost for one then we would need to change it for everyone. The property owner believed that their value did not increase because of the street, sewer, curb and gutter replacement. The clay sewer was replaced. There has been an ongoing debate about the longevity of clay sewer pipes. The City has been working over the last few years to replace all the existing clay sewer pipes. Clay may last 100 hundred years or break tomorrow. Isanti has had problems with the clay sewer pipes several years ago. Replacing the clay pipes is a precautionary maintenance process. The cost of one major pipe burst dwarfs the cost of a complete neighborhood replacement. This does not however diminish the impact of a 5k to 10k assessment.

The Council debated the merits of a liquor store expansion vs. building a new store. The current store needs major repair even without a remodel or new store build. It was just a month or so ago that several members of city staff and the liquor store staff and I were hurriedly moving inventory because there was water pouring out of the damaged sprinkler system. Nothing like a freezing cold shower combined with insulation and drywall. The cost difference between a remodel and a new store is 7% to 8% more for the new store. The benefits of a new store is that current store operations do not need to stop during construction, better location of the store and more parking, lower maintenance and lower energy cost. The Liquor Store Committee, which CM Johnson and I sit on, also considered the need to have a new building be resalable on the commercial market. This becomes important as the state and County are liberalizing liquor sales. If at some point in the future liquor sales are no longer controlled by the City we can much more easily sell the new building vs. the old. The other major point considered was if the current location should not be reconsidered. The idea has been raised to move the location out 65. This would increase sales but would also have high acquisition cost, take prime commercial real-estate off the tax rolls and may very well devastate the current commercial business adjacent to the liquor store. The Council voted to build new on the current location on the northern most portion of the existing lot. This will allow for continued operation at the current store until the move to the new store takes place. The cost of the new building will come from roughly $650,000 excess in the liquor fund and a bond paid for by liquor store profits. There will be no tax payer money used for this project. There will however be less money available to transfer to the general fund to. This is a long term investment that will more than pay for itself but we need to be honest about the funding and impact on our budget.

The Council made the final decision last night on street number and naming east of 65 along with what and who would be paid for the changes. The decision was to extend all street names from west to east and use numbering system for north/south streets. The City also agreed to pay $250 of any addressing changes for those residents whose homes were in place before the June Council meeting last year when it was first decided to make a change. After the June meeting developers and builders were notified the addresses were temporary and therefore should not have placed the address stones in homes. This has been a difficult process but the sooner we make the right decision the less harm will be done. I am thankful the Council was able to act and the city can move forward.

I am also happy to say each of these hard Council decisions was made by unanimous vote.

The City Audit presentation reveals two important facts. First, is that the hiring of our Finance Director was one of the best decision the city has ever made. We were given a clean audit and the previous years’ note about separation of duties was finally removed. Having a finance professional in this position has been a tremendous improvement for the City. The second is that we are at a tipping point of city debt and the ability to pay for it while reducing our tax burden. I have spoken about this extensively and will only add one structural concern to my past statements. Building permits and fees have fallen sharply. The City is more dependent on Local Government Aid in our budget. We have not trimmed cost for operations we no longer need and are subsidizing it with the extra LGA and interest income. One decision by the state or change in the LGA formula and the only recourse will be to raise taxes sharply if the appropriate cuts in spending are not made. I will be discussing this more this summer as we start the budget process and stressing the need to follow through on Long Term Financial Planning so we are able to adjust more quickly to changes in our community.