Randall gets break on electric rates; pays back TIF funds | News
Randall City Council received some good news and some bad news Wednesday regarding the city’s budget.
City manager Matt Pantzke told the council that he will make significant savings on his electricity wholesale contract from 2022. However, he recently had to pay a significant amount to Morrison County due to a mistake committed 15 years ago.
First, the council unanimously approved a new wholesale agreement with Minnesota Power that will cut the city’s energy bills by 20%.
The agreement runs until December 31, 2029 and was negotiated by the Northeastern Minnesota Municipal Power Agency (NEMMPA). The organization represents 13 cities that buy utilities through Minnesota Power.
“It is basically a revision of our current contract, which was in force until 2024,” said Pantzke. “Part of the negotiation process was to revise the current contract and then extend it from 2024 to 2029.
The cost reduction begins January 1, 2022. The city will also receive a signing bonus of $ 5,666.70. Pantzke said the 13 parishes had come together to work for a better tariff for Minnesota Power.
“This kind of shows what to do with numbers – if you put everyone in a group instead of negotiating about each one, things will happen,” said Councilor Jim Chyba.
Less positively, Pantzke shared with the council that it had been informed by the Minnesota State Auditor’s Office that it had recently reviewed the decertification of the city’s TIF District 3, which was helping with the costs associated with the Brummer housing development. The district was decertified by the council at its December 2020 meeting.
“It turned out that at the beginning of the district in 2005 and 2006 more administrative expenses were incurred than the district allowed,” said Pantzke.
Specifically, the city has exceeded the 10% limit it could collect in TIF dollars. This resulted in Pantzke having to repay $ 12,864 to Morrison County.
However, the city gets some of the money back. Pantzke said it will be redistributed and assume that the city will receive about a third of that amount in 2022.
“This, too, is something that unfortunately happened years and years ago,” he said. “When they went through it, they found this problem and we had to pay it back. I just wanted to make you all aware of that. “
On the subject of TIF districts, Pantzke said he was also in contact with the city’s financial advisor, Jason Murray of David Drown Associates. It compiles information for the city in the event a developer interested in buying 25.89 hectares owned by the city to expand their Brummer annex wants to go that route. The district would help install water, sewage and roads in the new development.
Pantzke said with Murray’s preliminary numbers, if the city went ahead and put the land up for sale, any potential developer would know they are TIF-enabled.
“There are some rules and regulations for TIF districts,” said Pantzke. “You can be income qualifying for some of them.”
He said Murray told him it was not uncommon for retirees to buy land and build houses in TIF districts with restricted incomes.
Often these are people who “sell the farm to move into town,” said Pantzke. Retirees are good candidates to enter such a development, he said, because they have low retirement incomes – which qualifies them – but can potentially leave a lot of money in the bank.
“Those who are retired live from their retirement,” said Pantzke. “Your income is lower than, for example, a family who works and earns a lot. In TIF districts it is common for retirees to move in, build a house and have no mortgage, but still qualify. “
Randall City Council:
On other matters Wednesday, Randall Alderman:
• Set a time and date for the budget review and staff meeting for Tuesday, December 7th, 9:00 AM;
• Was informed by City Manager Matt Pantzke that the city has to replace the oven in the town hall. The furnace was around 20 years old and was replaced by a highly efficient system;
• Discussed including the cost of street lighting in electricity supplier. Pantzke said in the past that the city had just eaten up these costs. After checking with Minnesota Power, he learned that each lamp costs about $ 70 a year in electricity. There are 130 street lamps in the city; and
• Heard a report from Pantzke that the Randall Municipal Liquor Store has exceeded its expected sales of $ 750,000 in 2021. By the end of October, it had exceeded that mark by about $ 61,000.
The next meeting of Randall City Council will be on Wednesday, December 15 at 6 p.m. at Randall City Hall.