Summer?

With spring (hopefully) here the city is in the process of changing directions in what we do to accommodate the summer season. Plows have been taken off and stored. Trucks have been cleaned of sand and salt. Brine containers have been emptied and removed. The grader is now grading roads rather than plowing and mowing equipment has been readied.
The wastewater treatment plant begins its season with a survey of conditions in the spray irrigation fields. Trees that came down in the winter are cleared where they were in the way. Spray heads are tested, fixed and replaced as needed. Pumps are reviewed and irrigation starts. The system we have relies on winter storage and summer disposal of effluent, so every day counts. With summer comes construction season for many. That means the city locates utility lines among other needs.
Parks are being to be maintained on a consistent basis. The bathroom has been opened for public use at City Park. Inspections are done on a regular basis and the beach is readied for summer use. A new barbeque grill will be installed in City Park.
The dock at the landing has been reinstalled. Most years the dock at the landing is not removed but this past season one of the floating sections developed a leak and needed to be replaced or repaired. Replacement was costly and welding of the plastic float seemed iffy. One of the public works crew thought that filling the float with foam was a good idea. After checking with those that know, we filled the float with closed cell foam at about one third the cost of replacement. The dock looks and works great.
The Cemetery Commission has set a date for spring cleanup for May 9th at 9:00 am. Anyone interested in helping out is encouraged to attend. If the day brings foul weather they have reserved the May 15th at 9:00 as an alternate date. The friends of the Cemetery meet every Monday at 9:00 am throughout the summer to spruce up the grounds and make it look as nice as possible.
I think we’re ready for summer if it ever gets here. The influx of summer residents and visitors makes for Breezy Point to be a very dynamic place. We all look forward to warmer weather and the fun that comes with summers in northern Minnesota. Make it a great year!

Every Little Bit Helps!

Managing in times of fiscal stress can be a challenge. Revenues are down. Some of our expenses have gone up considerably such as fuel. Competition is fierce which provides some relief. Reconsidering most things becomes the norm. More needs become wants as our viewpoints change.

Every chance we get we’re looking at cutting costs. We search for the best prices in purchasing products. We look towards more efficient ways of doing things. Service levels are scrutinized. Overtime is avoided. We have been selling surplus property on eBay. Contracts are being renegotiated. Spending occurs only where the need exists.

This really is paying off. The lighting at City Hall has been changed to a more efficient standard. Cell phones have been changed to reduce our costs. Programmable thermostats have been installed in city hall. In the recent remodeling we reused cabinets. No new furnishings were bought. A new score board will appear in city park with a change in vending machines at no cost.

Another recent success is that of a new copier. You may think that getting a new copier would cost more but this wasn’t the case. With the price of copy machines going down and competition improving we were able to reduce costs for a copier at the Public Safety Building last year. This saved a good deal of money. We attempted to address the copier at city hall at that time, but given the lease terms we were unable to do it then.

This year we took another look and found that we could buy out the lease and replace the machine we have with a smaller and more inexpensive machine that meets our needs at a significantly lower cost. Without getting into the specifics of brands and detailed expenses our cost was reduced from approximately $715 per month, which included maintenance and some supplies. We reduced our costs to approximately $450 per month with similar arrangements. The annual savings amounts to about $3,400.

Some may say in the grand scheme of things perhaps that isn’t significant. I’d say it is. Nickels and dimes add up. Shopping around for the best deal is important. Working competition has its advantages and recognizing our needs can save dollars.

Every little bit helps.

Cooperation

Sometimes the big picture gets lost in the rhetoric we hear in the media pertaining to government. We hear all about the things that don’t go right. There is this pervasive attitude that government is wasteful or inefficient. I believe these are unfair in most instances however we can always find examples that fit our way of thinking.

I do however have to point out that government is looking for more and more ways to work together to solve problems or issues to save costs and improve efficiency in government. Recently Region Five Development Commission sponsored meetings entitled “City Conversations”. The purpose of the meetings was to gather local governmental representatives together to talk about what areas of need exist and how we can help each other accomplish them while saving funds, sharing expertise, equipment or manpower.

The workshop setting to gather local governments may be new but the concept of cooperation isn’t. The City of Breezy Point has been cooperating with Pequot Lakes and Ideal Township to provide fire service at a lower cost than having our own department. The city has been providing police service to Pelican Township. Recently we explored the possibility of a shared planner. There are mutual aid agreements in place for fire and police protection. We have an informal agreement concerning backup for sewer operations.

The revenue side has been tough on all of us. Local Government Aid was taken from the city two years ago. Other cities are potentially loosing it with this budget cycle. There are “unfunded mandates” that push expenses on us. We have recently had a marked decrease in market value and a tax appeal that has reduced taxable market value of property. I think most governments are on the lookout for ways to save money, time, and share expertise to deal with the changing life as we know it.

A recent success involves the need for a licensed septic system inspector. With a retirement and change in staff we lost the persons who did this for the city. Filling this void is necessary and important as we need to address the concerns with new and replacement systems. Crow Wing County suggested they have individuals who are properly licensed and agreed to help us with this at no cost to the city.

Being frugal and prudent is expected. Finding ways to accomplish our goals in that fashion is also expected. Cooperation is one means towards getting there.

TIF Issues

The city has worked with individuals in the past using an economic development tool called Tax Increment Financing. This tool is a means of collecting taxes to use on a specified purpose. Tax Increment is used to generate a project that couldn’t be realized without its assistance.

There are a few different types of Tax Increment Districts. An Economic Development District lasts for approximately 10 years and is generally used with vacant property. A Redevelopment District can last up to 25 years. With a Redevelopment District the property needs to have buildings and be substandard or blighted in some way to qualify. There are other types of districts but these are the most common.

So how does this work? The mechanism of Tax Increment Financing starts with a parcel of property. What happens is a developer wishes to do a project but the costs of doing the project exceeds what it takes to make it work. With a redevelopment project, as an example, it is easy to look at the cost of removing a building and replacing it, creating a higher cost than starting with vacant property. To address these added costs the city assists the developer with tax increments that writes down the costs. They do this by certifying the taxable value of a property prior to development and then capture the difference between old tax and the tax created by the new development. This is the increment. That increment is then kept separate from other taxes and used to pay for costs associated with the assistance to the development.

The process of doing this is somewhat involved. The city needs to develop a plan to meet state requirements. This plan talks about what is going to be accomplished, sets the budget and determines the increment that will be received. The developer then signs a development agreement which states what he is going to do to accomplish the development. When the development is completed it generates larger taxes then previously paid on the parcel generating the increment. Within the development agreement is typically an assessment agreement or other assurance in value to protect the holders of the financing mechanism that increments will be paid.

Recently we saw a large decline in tax value for properties held by Whitebirch, Inc. The Marina II was one property which was improved as a result of Tax Increment. The agreement with them had a clause not to challenge the taxable value of their property, if they did they defaulted on the agreement. This was done and a notice was sent demanding the default be cured. In the event it isn’t cured the city will pursue remedies provided for in the agreement.

Tax Increment has its place and is a useful tool but in this environment of changing property values its use comes into question. In this instance the city had developed a “pay as you go” approach which means we pay only according to the amount of increment received. By doing this we limit the risk taken. In this instance we change the landscape in terms of what was meant to happen.

Reduced Values

The issue of taxable valuation has come to the forefront in Breezy Point in a big way. As I’m sure you are aware the property tax system relies on setting the value of properties that is used, in part, to determine property taxes. In general the higher the value, the more property tax that is payable. The system has a few checks and balances. Each year the values are reviewed and perhaps adjusted to reflect market conditions. Each year cities and counties in the state hold a meeting called the Board of Appeal and Equalization. This meeting is where property owners have an opportunity to question their assessed value.

State law also provides that property owners can use the court system for a tax appeal. This appeal process is outside of the Board of Appeal and Equalization process. It can be undertaken at any time. It involves the filing with the courts an appeal to the value of the property. The subsequent process can get rather involved but the outcome includes a judge making a ruling about the property value under appeal.

In Breezy Point the appeal process has occurred with Whitebirch, Inc. and concluded for all of the properties on February 22, 2011. Whitebirch, Inc is the parent company of Breezy Point Resort. The outcome was a rather large reduction in overall value. The process used included the hiring of an independent appraiser. Appraisers use three factors to determine value when it comes to commercial properties. These include cost, market, and income. With non-commercial properties the income approach isn’t used. In the past a great deal of weigh was assigned to the cost of a property but the other factors were considered. Given the economy we’re presently experiencing the appraisers are now factoring income more heavily. Cost factors seem to be much less of a consideration.

The outcome we talked about resulted in the value of the resort dropping from approximately $22.8 million to $10 million. With the change in values, comes a reduction in taxes payable. With less taxes paid by one entity the burden of taxation then is shifted to other property owners.

A very large concern here is the change in approach towards valuation. The past focused on costs as the primary basis towards valuation. Now the focus is changing to income. This change could result in a tidal wave of taxation adjustments for all commercial properties. Given the already apparent adjustment in the housing market the trend seems to be going lower with a market adjustment in all areas. I would think at some point we’ll see the correction settle to a point of equilibrium but for now adjustments in value in all areas is the name of the game.

The Move Commences

This year the city had considered its space and building needs. It was decided some upgrades and refinishing were in order. A plan, with modest costs and in house labor was developed to address the needs at city hall. The building had seen some minor changes throughout its history but much of the carpet was original being in place since 1995. It had seen better days with wear and tear being apparent. When the Public Safety Building was established a few changes took place with shifting of office space.

The first phase of moving has started. The office space that housed the planner was converted to administrative functions with a new office being built within this area. All the walls have been painted and new carpeting laid. A work room was established for the copier, office supplies, and room to develop packets for council and committee meetings. Some left over cabinets from a previous minor change in the building were used in this room. All that was needed to be purchased was a countertop. The process of reassembly is occurring. With this we’ve been able to purge a great deal paperwork for recycling. The purging of files will continue with organization and a better approach to a central filing system will be established.

The next steps include the existing administrative offices being painted and new carpeting applied. A conference room will be established. In this space we’ll house planning, public works and sewer office space. Property files will be consolidated and a more efficient approach will be taken here to make these uses work together.

The final phase for interior work will include a recarpeting of the council chambers along with a removal of the dais and reorientation of the council table. Doing this improves the utility of the room by making a bit more space available. It also allows the AV equipment to stay where it is and be in the rear of the room rather than off to one side. The tiled area in this room was thoroughly stripped and scrubbed. This was no easy task as industrial stripper was used with a floor scrubber to clean up the years of accumulated grime. Once cleaned an industrial sealer was applied to help to keep it clean and maintain the tile.

This spring the last phase of rehabilitation will occur with the reshingling of the roof. The shingles have rapidly deteriorated in the past couple of years and a new roof is needed. The shingles that exist were on a recall so we’re hoping to get some relief towards the cost of replacement.

Changing the looks and efficiency of the building is a huge step but not the last as we work towards better operations. There is a great deal of work needed to better the organization. This all takes time but progress, even with small steps, moves us forward towards a better future.

The Next Step

Every business, including governments, has a responsibility to address customer concerns. We all strive to meet our goals. There is also the need to get the work done and make progress. Even on a personal level we work towards these attributes. These days standing still really means moving behind as the world doesn’t stop and others move ahead. I think that’s the way it is supposed to happen.

Doing this means change is upon us and it also means we move in the direction that positions us to meet our stated goals. The city undertook an effort to update our Comprehensive Plan. This process took a number of years. The finished product was adopted by the City Council in June of 2010. Within that plan are numerous stated goals. Accomplishing these takes time and a concretive effort from all parties involved in the process. It starts with the goal but quickly moves to the staff person who will carry these goals forward. As it continues to move forward it goes to the Planning Commission and may ultimately move to the City Council.

Aside from the Comprehensive Plan there are day to day responsibilities the city is responsible for. Certainly there are permit requests that need to be addressed. Some require thorough review of the situation and others are easy to accomplish. Some require review and approval from the Planning Commission and the City Council. There are also requests made for information of which may not result in the issuance of a permit. All of this takes time and those requesting service deserve to be dealt with on a timely basis.

The dynamics of a group are ever changing. Dealing with this means we need to address the change appropriately to meet our responsibilities and obligations. We also need to continue to strive towards the goals we have committed ourselves to. This is no different than a business trying to meet their goals in addressing customer service or expanding their business.

With the loss of a staff person the council was faced with the question of how we meet the needs of the city. The city discussed options with other units of government. The possibility of contracting with a neighboring city was explored to no avail. The question was addressed and we’re advertising for the hiring of a planner. We’re hopeful we find a suitable person to fill this position. We continue to look into our obligation to deal with septic tank inspections and approvals. At this point it is possible to work with another governmental body to address this need. Finding efficient and effective solutions is important.

Waiting to fail is not an option, taking care of business is important for any organization.

Breezy Point Channel

This last year the city looked at the possibility of acquiring tax forfeiture property along the channel and Breezy Point Drive. This had long been a goal of the city and was included in the Comprehensive Plan. After several discussions with Crow Wing County the city was able to work with them in making this acquisition.

The idea for the transaction was to acquire the property and build a fishing dock along it. Each spring we see fishermen crowding the banks to get in on the early bite. It was felt that a pier that runs along the channel would provide an attractive and functional amenity that could also be handicap assessable. The extent of improvements is yet to be determined but with any project you take it in steps and acquiring the land comes first.

The final obstacle has been cleared, that of DNR approval. They have agreed the city can acquire the property. So the next step is setting up the transaction with the county. They will prepare the deeds and record the instrument upon payment of the costs for the land. What has been agreed to, is a cost of $16,200 for lots 35-37 and 39-47 of the 22nd Addition to Breezy Point.

With the transfer of land the Park and Recreation Committee can start the process of planning to determine what the proposed project would involve. Once some decisions are made we’ll be looking at funding options towards the eventual project.

Progress is being made and I know we have a number of excited people concerning this project. Stay tuned for change but progress can sometimes be slow, especially when it comes to funding.

Fiscal Review

As we look towards closing out our books for 2010 I’m gratified to note that staff has been very diligent about keeping their budgets in check. It was a tough year in a lot of respects with changes in state funding, done in 2009 and affecting operations in 2010.

Taking a quick look at expenses we finished out the year with an unaudited reference of 88% of budget. Each department carried its own balance but every department came in under budget, some more than others. In accomplishing this, every department head worked towards a more efficient approach in operations but I think the effort really involved all employees. Some efforts were in making due with what we have. Some efforts involved creative thinking. Some were really ones of a conscious effort of “is there a need or a want”. And others were strong statements, in effect of, we can’t afford to go beyond this point. Most of these savings will continue with changes in operations. Some include deferred maintenance. These issues do catch up to you in time but for now we’re making it work.

On the revenue side of things we came in with unaudited revenues to budget figure of 99%. A lot of the proposed revenues we anticipated were down. These include things like fees for services. Tax revenue was also down somewhat with some properties not making their payments for whatever reason. Where most of the benefit was received in revenues was with Delinquent Taxes. Here we saw the start of a changing economy where properties are changing hands and delinquent taxes are being paid. I would assume this trend will continue but it is difficult to know for sure what the market will bring. The crystal ball is still a bit foggy on these details.

With the new year we have new beginnings and a new budget to work with. The winter season has been already showing stress with the snow plow budget. Managing these expenses means 1 inch snows don’t get attention but periodic 1 inch snows become problems which need to be dealt with. I spoke earlier about the budget for 2011 which is less than 2010’s budget. We’ll continue to do what we can to manage with what we have. Accomplishing these expenditure ratios will be difficult to do in 2011. Our goal however is to work within our means and continue the excellence in efficiency as we move through 2011.

Change

As the end of the year draws near the City of Breezy Point is at the crossroads of change. This change includes two council members who have served the city for many years letting their terms lapse and two others joining the council. Many thanks and appreciation goes out to Diane Williams and Erik Lee. Diane spending 10 years on the council and Erik spending 4 years.

Council members elect include Tom Lillehei and Scott Willer. Both were previously on the Planning Commission and Scott Willer is a former council member. We welcome them and look forward to their service with the Oaths of Office being taken on January 3, 2011.

Another change in leadership occurs within the Cemetery Commission. Mike Landecker, one of the founders of Pelican Woods Cemetery, has also let his term pass. He has felt it is time for another to carry the reins within the Cemetery Commission so a newcomer will be appointed. Mike has spent countless hours to make the cemetery the best it can be with a labor of love. His attention to detail truly shows when it comes to outcomes. With Mike’s many years of service to and for the commission he will be missed but hopefully open to answer those questions of the past that maybe hard to find.

Another change is that of the budget for 2011. The final levy was adopted at a Special December 20th Council Meeting. This year was difficult, not only to this city but all jurisdictions with a change in taxable value. Almost without exception every taxing jurisdiction in the state saw declines in property values for all the reasons we’re aware of. Many jurisdictions have relied on growth to address increases in budgets to keep property taxes relatively flat. This year, with declining taxable values, even keeping a levy flat from that of last year means increases in taxes for most property owners.

Breezy Point was no different. We lost $295,694 in tax value. Keeping the tax levy the same as last year resulted in an increase of $25.76 for a home valued at $150,000. With this understanding the council sought to further reduce the levy. After final council action the levy was reduced an additional $50,600. This didn’t bring the tax rate back to the level of 2010 but it did head off some of the increase that was proposed. With the new budget we’ll continue to be conscious of spending and resources living with less than the past year.

Budgets, Levies and Taxes

Each year the city council works on a budget for the upcoming year. Most years the effort takes a good deal of time starting in June or July. The process takes on all forms of reviewing records; looking at projections and determining what needs are and will be for up to 18 months in the future.

This year was no different in these respects but what was of concern was that of what will happen to the tax base. Taxes are paid by property taxes which are determined through a set of formulas and calculations. It all starts with the value of a piece of property. The County Assessor looks at each individual property to determine a value based on market conditions. Market conditions are defined by willing buyers and sellers. Properties that are foreclosed on are not used to determine market. Each property, by law, must be assessed between 90% and 105% of the market value for a property. All properties in each taxing jurisdiction are assessed.

The next step in the process is to develop the Tax Capacity for each jurisdiction. Taxpayers fall into classes of residential homestead, non-homestead residential, commercial, industrial and others as defined by statute. With these categories a class rate is assigned to determine tax capacity. Homestead residential is 1% of the market value for the first $500,000. Commercial is at 1.5% for the first $150,000 and 2% for values above that. Each property is then assigned a tax capacity and that amount is the value you are taxed on.

Local taxing jurisdictions set their levies for the upcoming year looking at revenues and expenditures. The preliminary levies are certified to the county. Once the county has determined the Tax Capacity for a taxing jurisdiction and a city its levy, the levy is divided by the Tax Capacity to get a tax rate. This is expressed in a percentage and the projected rate for Breezy Point was based on the preliminary levy to be 35.189%. With further reductions to the preliminary levy the city reduced the levy another $16,942 dropping the tax rate to 34.854%. This revised levy amount was $10 less than the levy set last year.

Last year the tax rate was 33.137%. The problem came with the loss of tax capacity of the city which came mostly from a general reduction in property values. Keeping the levy the same but with a reduction in tax capacity by 5.5% resulted in a 1.717% increase in the tax rate. The unfortunate part is we don’t have or know the tax capacity until early December for the upcoming year.

The city council felt that with the loss of tax capacity and the potential for additional reductions next year that cuts to the budget were needed. The goal is to reduce the level of taxes (tax rate) to that of last year. The final levy needs to be certified to the county prior to December 28th.

Planning Commissioner Anyone?

The city adopted the Comprehensive Plan in June of this year and with that adoption, came a number of things the city will do as it relates to the plan. At the top of the list was a new zoning district called the Resort Commercial District. It was felt that a district should be established that encompasses the types of land uses that we see with this type of use. Previously we have had several districts that didn’t mesh as well as they should have given the type of land uses we see.

The Planning Commission has work diligently on this for some time and recently adopted a change to the ordinance to make that addition. Within the next month or so we’ll make the physical changes to the zoning map to categorize all properties that fall within that designation.

Another change that has occurred is that of renaming a couple of districts. This was done to better characterize the present and future use of the land. This established the Urban Reserve District and the Conservation-Open Space Districts. In these instances the previous Agricultural Zone and the Open Zone were changed in designations but rezoning of the land will not occur.

Two items have been taken care of but there are many more to go. They include: Creating an Airport District with the help of the Airport Association, Creating an Estate Lot Zoning District, Rezoning un-sewered R-3 to R-2, establishing Landscaping and Screening standards, reworking the Subdivision Ordinance, reworking the Zoning Ordinance in a different format, creating a Shoreland Management Overlay District and a Campground Zoning District.

These, as you can imagine, take time to work through. The Planning Commission also has periodic land use applications for consideration and review. Moving these goals along are priorities for the city and any input from the public, along the way, is appreciated. In addition if you have interest in the Planning Commission and their activities the city is currently accepting applications for Commissioners. Application forms are available at our website but also available by calling city hall.