By MaryHelen Swanson

Through several grueling worksessions and a lengthy retreat, the North Branch City Council has struggled with the 2007 levy and budget.

Monday night, Sept. 11, the council voted 3-2 on a 32.64 percent levy increase.

If youíre living in a home valued at $200,000 and the market value increases by the anticipated 7.1 percent, youíll be paying an extra $181 in taxes next year.

Opposition to the levy came from councilors Amy Oehlers and Theresa Furman.

One of the biggest concerns in the whole budget process is the ESSBY Business Park.

This project, which got its beginning in 2003, as the city council began to discuss a mixed income housing development, has been the hottest issue on council agendas for nearly three years.

Right now, there is a $1.8 million deficit on a balloon payment on bonds sold for land purchase and infrastructure improvements to the project area. The payment is due in 2009.

Because the city is not currently moving forward with the planned development, that was to include industrial, commercial and housing, the taxpayers are going to have to pick up the tab, and the council is looking at breaking that debt into three segments at $660,000 a year for the next three years.

Adding that line item to the 2007 budget is the main cause for the 32 percent levy increase.

Budget work on Aug. 24

Before the council at the Aug. 24 worksession was a preliminary proposed budget with a whopping 54.62 percent increase.

This was unacceptable to the council and mayor.

Mayor Gloria Karsky came in with a list of cuts, drastic cuts that she knew were not feasible. But the list demonstrated how deep the cuts would be and how much they would affect the function of the city.

At that meeting, Councilwoman Kathy Blomquist said she couldnít go along with severe cuts while the mayor was saying ìwe have to be responsible for our budget.î

Councilor Larry Erickson couldnít accept the cuts, either, saying people have said theyíd rather pay taxes than have more houses (in the ESSBY project).

A 10 percent levy, he said that night, would be going backward.

The housing component of the ESSBY project was a big issue that night.

Councilors Amy Oehlers and Theresa Furman have been holding firm on opposing a comprehensive plan amendment that would change the zoning in the ESSBY area to allow for denser housing.

On Monday night this week, they did not appear to have any different opinions on the subject.

City Administrator Joe Lynch informed the council that if the council uses reserves to balance the budget, it would hurt the cityís good bond rating.

It was also noted that night in August, that Blackstone, the development company interested in the housing in the ESSBY area, had pulled out.

And Greater Minnesota Housing, which the city has worked with since 2003, threatened to pull the $1 million offer to help with affordable housing.

City finance director David Stutelberg told the council that night the city has $55,000/acre into the ESSBY project.

5 p.m., Aug. 20 - Retreat

A council retreat on Aug. 30 was anything but a relaxing event. In spite of delicious food provided by council members and a comfortable, cool room at the new library, discussion became heated over the 2007 budget.

Stutelberg continued to press the necessity of a $660,000 line item for the $1.8 million ESSBY deficit.

Councilor Oehlers brought the comp plan into the discussion, indicating slightly that she might reconsider her vote on the much needed amendment if the comp plan is revised.

Stutelberg noted that the comp plan projections are based on 150 new homes per year. Thatís where the housing could come into play in the ESSBY project.

This year, however, new housing starts are less than 50 to date.

The 150 new homes would pay for the wastewater treatment and water treatment plants and a future water tower. If no new homes, current taxpayers will pick up those costs, he said.

Phasing in about 36 new homes per year sounded feasible to the councilors. But it wasnít enough for Oehlers who stuck to her guns about revising the comp plan.

That night Furman said her response wasnít exactly ìnoî on housing, but she still needed more time to think about it.

There were many breaks in the discussion at the retreat, especially when the conversation became so heated that expletives were uttered.

The $660,000 set aside for the bond payment remained the hot issue.

The right move

Mayor Karsky asked for trust that night, but said the right thing to do would be to move forward with housing on 100 of the nearly 400-acre ESSBY project, phase in the housing and get the industrial park up and running.

Oehlers had asked for the impact on taxpayers of the housing part of the ESSBY development.

Erickson had noted that even if it were all industrial there would be additional costs to the city.

It was also discussed that night that the city has a chance at a $1.5 million federal grant to help with the infrastructure up Flink Avenue that would connect water and sewer to the ESSBY project.

It is important that the city know what it is doing in the ESSBY project to write the grant. Time is ticking.

Jobs, jobs, jobs

Of particular interest to the councilors and taxpayers are the kind of jobs that will come to the new industrial park.

The mayor said Chris Eng of the county HRA-EDA has talked about 27 new business contacts, 17 of those being interested in North Branch, with an average wage of $13.56 per hour.

Blomquist responded saying $13.56 will not buy a house in North Branch.

The mayor said the city needs business to improve the tax base, if we say the wage has to be $25 per hour, what will the city do?, she asked.

Eng has been invited to a Sept. 21 worksession to relay information on business contacts and job opportunities.

Sept. 7 - another worksession

This session included planning commissioners and city EDA members. PC member Doylene Voligny concurred with Erickson on the peopleís wishes - to pay taxes rather than have more housing.

But how do we get out of it, the mayor asked that night, being $9.5 million into the project?

PC member Joni Monk also agreed saying ìseems like we have to do the housing.î

Erickson said the EDA is ready to go with marketing if the project is ready, and the freeway location is needed.

What have we learned, Monk asked.

ìDonít buy land until we have a plan,î said Mayor Karsky.

For now, it appears the city must go with the housing or the taxpayers will be opening their purses wide for at least the next three years.

And that also means the 93-acre Sederberg property needs to be purchased to complete the project. The city is working with the county board and county HRA-EDA on a purchase proposal.

Back to budget

Later on the night of Sept. 7, the councilors listened to options.

Options included putting $85,000 worth of needs back into the budget, including an additional policeman, and necessary road maintenance. That created a 12.9 percent increase.

Another option was to keep those add-ins out, making a 10 percent increase.

Neither included that proverbial $660,000 for the ESSBY payment.

One option included using the $150,000 set aside for the community center fund to give $50,000 to the Hwy. 95 bridge, $50,000 to the public facilities fund and use $50,000 to work down the $85,000 add-ons.

It would have gotten the police position and road improvements.

It was then that Councilor Blomquist, the councilís biggest advocate for the proposed park referendum this fall, said if the ESSBY payment is in, sheís pulling the referendum out. It would have meant another $32 per household. She did in fact, pull it out this week after the preliminary levy was approved.

Sept. 11 - a moment of silence and the budget- again

So, this week the council had to make a decision, the preliminary levy needed to be to the county auditor by Friday.

Options were reviewed. It took several votes to come up with the proposed levy.

The funding for the ESSBY payment made the final cut, and the levy increase came out at 32.64 percent.

The additional police officer did not get in.

Editorís note:

It was noted at some point during all this planning, that perhaps the public was not aware of the ESSBY project. In checking the archives, the Post Review found at least 41 articles in which the ESSBY project was either the main topic, or at least discussed. And there were more in the early years, before it was being called ESSBY.

A good overview of the entire project can be found in the article ìTown meeting on North Branch Project Nov. 3î which can be found online in our archives posted Oct. 19, 2005.