Randall City sig

The Randall City Council got some good news and some bad news, Wednesday, as far as the city’s budget is concerned.

City Manager Matt Pantzke told the Council it will save significantly on its wholesale electric agreement, beginning in 2022. However, he also recently had to pay a substantial amount to Morrison County because of a mistake that was made 15 years ago.

First, the Council unanimously approved a new wholesale electric agreement with Minnesota Power that will result in a 20% reduction in the city’s energy costs.

The agreement lasts through Dec. 31, 2029, and was negotiated by the Northeastern Minnesota Municipal Power Agency (NEMMPA). The organization represents 13 cities that purchase utilities through Minnesota Power.

“It’s basically a revision of our current contract that was in place through 2024,” Pantzke said. “Part of the negotiating process was to revise the current contract, and then we would extend from 2024 through 2029.

The reduction in costs will begin Jan. 1, 2022. The city will also get a signing bonus of $5,666.70. Pantzke said the 13 municipalities came together to lobby for a better rate from Minnesota Power.

“This kind of shows what working with numbers — putting everybody into one group instead of negotiating each one, things are going to happen,” said Council Member Jim Chyba.

On a less positive note, Pantzke relayed to the Council that he had been informed by the Minnesota State Auditor’s Office that it had recently reviewed the decertification of the city’s tax increment financing (TIF) district 3, which helped with costs associated with the Brummer housing development. The district was decertified by the Council at its December 2020 meeting.

“It turns out, at the beginning of that district in 2005 and 2006, there was more administrative expenses than the district allowed,” Pantzke said.

Specifically, the city exceeded the 10% limit it could collect in TIF dollars. It resulted in Pantzke having to pay back $12,864 to Morrison County.

The city will get some of that money back, however. Pantzke said it will be redistributed and he anticipated the city will get approximately one third of that amount back in 2022.

“Again, this is stuff that happened, unfortunately, years and years ago,” he said. “When they went through it, they found this issue and we had to pay it back. I just wanted to make you guys all aware of that.”

On the subject of TIF districts, Pantzke said he had also been in contact with the city’s financial adviser, Jason Murray of David Drown Associates. He is putting together information for the city in case a developer interested in purchasing a 25.89-acre area of land owned by the city for an addition to the Brummer addition wants to go that route. The district would help install water, sewer and streets in the new development.

Pantzke said, with the preliminary numbers prepared by Murray, if the city moves forward and puts the land up for sale, any potential developer would know it is TIF eligible.

“There are some rules and regulations on TIF districts,” Pantzke said. “You can be income qualified on some of them.”

He said Murray told him it is not uncommon for retired people to purchase land and build homes in income-restricted TIF districts.

Oftentimes, these are people who “sell the farm to move to town,” Pantzke said. Retirees are good candidates to build in such a development, he said, because they have a low retirement income — which makes them qualified — but may have a lot of money stuck away in the bank.

“If you’re retired, you’re living off your retirement,” Pantzke said. “Your income is lower than, say, a family that’s working and making a high wage. It is common in TIF districts to see retired people come in, put up a house and not have a mortgage, but still qualify.”

Randall City Council Briefs:

In other business Wednesday, the Randall City Council:

• Set a time and date of 9 a.m. Tuesday, Dec. 7, for its budget review and employee meetings;

• Was informed by City Manager Matt Pantzke that the city had to replace the furnace at City Hall. The furnace was about 20 years old and was replaced by a high-efficiency unit;

• Discussed including the cost of street lights into electric utilities. Pantzke said in the past the city has just eaten that cost. After checking with Minnesota Power, he learned each light costs about $70 per year in electricity. There are 130 street lights in the city; and

• Heard a report from Pantzke that the Randall Municipal Liquor Store has already exceeded its $750,000 expected revenue in 2021. By the end of the October, it had eclipsed that mark by about $61,000.

The next meeting of the Randall City Council is at 6 p.m. Wednesday, Dec. 15, at Randall City Hall.

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