BEMIDJI -- Finding solutions to keep Bemidji's tax rate in check was a major point of conversation during the City Council's work session Monday.
The meeting began with a presentation from City Finance Director Ron Eischens, who informed the council about positive developments and challenges Bemdiji faces fiscally. According to the presentation, with the recent annexation, the city is having a market value increase of $60 million.
At the same time, the city is confronted with numerous infrastructure issues. Most pressing is a new water treatment plant at the city's water wells next to the Bemidji Regional Airport. The plant will treat chemicals, which were formerly used in firefighting foams, that have been identified in the wells.
The building project, taking place in two phases, is estimated to cost a total of $14 million. As part of the planning process, the city made a request to the Minnesota Legislature for funding in a bonding bill. Both the Legislature's regular session and first special session ended without any of these legislations, though.
"If we don't receive alternative or outside funding, the option for the council is we don't do some of these things, or we have to significantly raise rates or have tax increases," Eischens said.
Bemidji Mayor Rita Albrecht informed the council Monday that $10.1 million is included in the bonding bill currently in the House of Representatives, which could pass in the Legislature's current, second special session.
Another legislative request that has yet to get the stamp of approval was authorization for the city to place a referendum on the ballot this year to raise a sales tax of 0.5%. The revenue generated from such a tax would be used to assist in covering capital maintenance costs at the Sanford Center, making improvements to the city's wastewater treatment plant, and using a portion to help with the rest of the water wells treatment plant cost.
Along with these matters, Eischens also informed the council Monday that city staff is working to balance Bemidji's growth of service demands while also recognizing the financial impact of the coronavirus pandemic. As a result, Eischens said the staff have made a goal of having tax rate increase of zero.
"As a staff, we set our target at a zero tax rate change," Eischens said. "Our staff recommendations are certainly compromises, and they're not ideal. But, in order to reach our goal, we had to make those compromises."
An example of a compromise given Monday was the decision to defer the hiring of a deputy fire chief position to the city. Another adjustment is a proposal to reduce the amount budgeted for the Sanford Center's capital maintenance needs by $200,000.
Ward 5 Council member Nancy Erickson was against the latter move, though, and said, "I must say that I'm opposed to the reduction for the capital improvements, because all we're doing is digging ourselves a bigger hole."
While not outright opposing the idea, Albrecht also said reducing the maintenance amount can create challenges.
"Remember, when we decide not to fund something we've already levied for, for example the $200,000 toward the Sanford Center, it will still be there next year," Albrecht said. "The next council will have to figure out a way to put something back in."
Owned by the city, the Sanford Center is an event facility managed by the Ames, Iowa-based company VenuWorks. Opened in 2010, the facility includes a 4,373-seat arena and attached conference space. Along with dollars for capital maintenance, the city also budgets an operating investment annually for the facility, with the amount in 2019 coming to $450,000.
While Eischens noted adjustments to help reach the goal of having no change to the tax rate, such as the Sanford Center proposal, he also said Monday that the city still needs to reduce costs by $266,000 to reach that target.
During the meeting, Eischens was asked about any potential assistance from the Coronavirus Aid, Relief and Economic Security, or CARES, Act. In response, Eischens said CARES funding is only eligible for 2020 reimbursements and has no impact on 2021 budgeting.
"The city has a drawn out request, with money for supply items, masks and the barricade costs in downtown," Eischens said. "But we're not at six figures by any means."
Another topic produced during the meeting, directly related to the idea of deferring position hiring, was the question of an enforcement officer for the Greater Bemidji Area Joint Planning Board. The JPB is a combined zoning and planning authority made up of the city and Northern Township.
The JPB has been hoping for an enforcement officer to be the person to handle ordinance violations. However, the council debated whether now was the best time to hire the person.
Erickson, for example, was against the move and made a motion to freeze the hiring, which failed in a 4-1 vote.
"I think this is a piece of the budget that we really need to give direction to staff on," Albrecht said. "I believe our partners in Northern Township are expecting us to move forward one way or another on this. They have asked us at every meeting since December, so I think there's an expectation that we take action on this tonight."
However, Albrecht later acknowledged a lack of a consensus on the subject and also said a clearer picture was needed in terms of funding the position in the future.
"I find it challenging to move forward with this because of the uncertainty on whether it's funded in the next budget," Albrecht said. "It's not clear to me with the discussion that we've had."
Ward 1 Council member Michael Meehlhause introduced a motion to move forward with the hiring of the position and to direct staff to adjust budgeting to include it in 2021, too. He later withdrew his motion following Albrecht's statement about uncertainty. However, Meehlhause did say the discussion needs to happen "as soon as possible" and suggested a joint meeting with Northern Township officials.
According to Eischens, the position would have a $47,000 salary with $14,000 in benefits resulting in a $61,000 total cost to the city.