North Branch Mayor Ron Lindquist at the April 22 City Council meeting said the city is going to be facing some big hurdles over the next few years, and North Branch will have to change how it does business as a result of those challenges.
As a start in addressing those difficulties, Lindquist gave the following state of the city address:
“Residents of North Branch, city council members and city staff: Given the financial and economic condition that our city is in, I felt it required us to give a state of the city address to inform our citizens. With home, business, and land values decreasing, we have experienced rapidly declining taxable revenue. We will have to rethink the business of running our city. We must develop creative ways of delivering the quality of services that our residents and businesses really need.
“Now is the time that we, as a city, need to band together to start a series of extraordinary changes in our city government to include getting our debt in check and becoming a thriving city again. The difficulty of these tasks lies in creating a new model of local government while still remaining responsive to our citizens’ needs. We will be able to accomplish this by focusing on finances, transparency, communication and infrastructure. Moving forward, your newly elected City Council will be focused on being transparent. I want everyone to be knowledgeable, involved and informed during the decision-making process. Therefore, I felt it was important to talk openly about the various issues that we are facing as a city. We also need to look at new communication methods in order to reach as many of our citizens as possible.
“With a slight increase in the number of new home building permits, we are taking a step in the right direction after having five years of very little growth. The increase in new home building permits means some increase in fees and taxes that will help with the city’s finances. As an extra incentive to builders, the City Council approved the reduction of water and sewer fees.
“This past year we also had two large commercial permits. We as a city are excited for the new Fairview Clinic and North Branch Chevrolet. We thank them for investing in our city’s future.
“We, however, are being faced with huge financial debts that have been accrued over the past decade. As of record from the last auditor’s report, our city is in more than $59 million (of) debt. This debt is a combination of the economic times, continued spending from the abundant times and overexpansion that was assumed to be coming to our city. We are therefore in desperate need of some creative planning that will cause an unprecedented evolution of our city government, in addition to taking a long, hard look at every department and every facet of our city government in order to streamline our process of government. Our goal is to not raise taxes, to pay down the debt, to move forward with responsible spending and look at each facet of our city to make sure we are not duplicating services, all without raising taxes.
“As you know, the 2013 budget was set last year with an increase of approximately 2 percent. This may seem like a small increase and may not greatly affect a homeowner, but our businesses have felt an increase in taxes. They not only pay the city, school, and county taxes that we as homeowners pay, but also have an additional tax burden from the state. We want more business to come into our town, which means we need to encourage the current businesses to stay and thrive.
“Our bond rating on outstanding general obligation debt fell from A1 to Aa3 in December. This was caused as a result of our debt-to-revenue ratio, which may then cause an increase in our interest rate, and our ability to be able to bond. Also, our water and light department had a bond rating downgrade this year. Over the last few years, we have seen multiple rate increases in water, sewer and electric rates.
“Yes, we are paying a large amount of principal and interest at the present time, with an increase of a little over $225,000 this year from 2012 amount for a total of $1,495,904. Next year the increase will be $265,000 for the total of $1,760,684. So far the city has been able to manage this debt wit (few) increases in our levy.
“However, in 2016, the city is faced with a major intra-loan fund and payments that will have to be made to the county. This means that the city will have to have an account with $750,000 in it to pay these debts. Our citizens and businesses cannot withstand this percentage of increase in their taxes each year just to cover the debt.
“Presently, the ESSBY bonds are written in such a way that the cost per acre on this land makes it very difficult to market these 400 acres. I have asked Springsted Inc., our financial advisor, to look at the manner in which all of our bonds were written to figure out if they can be rewritten or renegotiated to bring our huge debt into a more manageable alignment.
“We, as the City Council, would like to speak with other landowners in the city. If they are able to sell their land, we would be able to collect fees and eventually taxes on this property. We could then use this extra tax revenue to pay down our bond, apply to other debts or even create a rainy-day fund. These actions will allow us to expand our tax base and generate the revenue we need to cover the increasing bond payments. We cannot rely on ESSBY alone to get us the growth we need. We have to create a climate where existing businesses are able to grow and expand.
“Our infrastructure is another concern that needs to be addressed because of our declining revenues. Our public works department has worked diligently on keeping our streets and roadways in good working condition. We must be willing to work with personnel from our county, and state, as well as develop our own long term plan for transportation in our city. Our infrastructure is a huge investment for our city and must be maintained for our city to stay viable.
“In conclusion, a reoccurring theme in the state of the city address is that I have made a commitment to work with the council to improve the financial stability of our city through reducing the principle and interest on the city’s bonds, building our reserves and investing in economic development. We are committed to being a city council that is very approachable and wants our citizens to be informed.
“The next few years will be very challenging but rewarding as we move into a more prosperous future. We will need to work smarter with the limited resources that we have. Yes, we have challenges, but we want to face those challenges to develop goals and to define the path that we need to take to bring expansion to North Branch.”
Lindquist then prompted citizens to contact him, the City Council or city staff with any questions or concerns they have about the state of the city.