Princeton voters will decide this fall whether or not to eliminate the Princeton Public Utilities Commission’s three members.
City leaders voted 3-2 last Friday to place the following question on the Nov. 3 ballot: “Shall the Princeton Public Utilities Commission be abolished?”
Voting in favor of placing the question on the ballot during a tense afternoon meeting were Mayor Brad Schumacher, Councilor Jenny Gerold, and Councilor Jeff Reynolds.
Councilor Jack Edmonds and Councilor Jules Zimmer voted against placing the question on the ballot.
Council members did not allow open forum and public comment during the 3 p.m. special meeting.
Open Forum Request
Zimmer initially made a request to add open forum after Schumacher opened the meeting and asked the council for a motion to adopt the agenda.
Zimmer referenced activity inside of the council chambers prior to the start of the meeting.
“I just heard a citizen who wanted to speak regarding this topic,” Zimmer said. “I think it would be a good thing for all citizens to be able to respond to this important matter that we are about to vote on.”
City Attorney Damian Toven said the council could add open forum by majority vote. Councilor Jack Edmonds seconded a motion by Zimmer to do so.
That motion failed 3-2, with Schumacher, Gerold, and Reynolds voting against open forum.
Request for Reading
Edmonds then attempted to add a motion to read a statement made by PUC Chairman Greg Hanson that had been delivered to city leaders shortly before the start of the 3 p.m. Friday meeting.
Hanson did not attend the special meeting in person.
Neither did Princeton Public Utilities General Manager Keith Butcher, Commissioner Dan Erickson, nor Commissioner Richard Schwartz.
None of the four participated via the teleconference application Zoom.
Edmond’s motion to read Hanson’s statement also failed 3-2, with Schumacher, Gerold, and Reynolds voting against it and Edmonds and Zimmer voting for it.
Reynolds then moved to approve the meeting agenda, with Gerold seconding his motion, which carried 4-1. Edmonds voted not to accept the meeting agenda.
PUC Statement Start
The Union-Times was given a copy of Hanson’s the statement prior to the start of the meeting, along with a one-page summary of a payment in lieu of taxes (PILOT) ad hoc committee meeting.
Hanson stated that any referendum or Nov. 3 ballot question affecting the existence of the Princeton Public Utilities Commission should be opposed because the commission has conducted the affairs of the utility both legally and ethically.
“The commission has acted solely in the interests of its ratepayers,” he wrote. “It has not been shown the council, with all of its other duties, will be able to more effectively oversee and direct utility operations in a more efficient way than a specifically targeted non-partisan, apolitical commission appointed by the council.”
Who Makes Payments
Although many utility ratepayers are also city taxpayers, this is not universal, Hanson stated.
There are ratepayers who do not live within city limits and there are city taxpayers that are not both water and electric utility customers.
“Whereas the commission advocates for all ratepayers, the city council is elected by city taxpayers and is responsible to only that constituency,” Hanson stated.
PUC Checks, Balances
Eliminating the commission would remove a natural check and balance to the council’s taxing authority, Hanson contended.
And without the commission, current or future city councils and mayors could transfer, without limit, money from utility funds to the city’s general fund.
This would have an impact on electric and water utility rates, Hanson wrote.
A depletion of utility reserve funds would negatively affect the utilities’ bond rating thereby increasing the cost of borrowing. This would also negatively affect the city’s bond rating increasing taxpayer costs as well.
Removing the commission would eliminate an opportunity for citizens to be involved in their community. Council would be vest all utility authority to itself, Hanson stated, adding citizens could still comment, however they would no longer have the opportunity to more fully participate in the commission process.
Action Is Required
If a Nov. 3 ballot question passes, under statute, all powers must be transferred from the commission to the council within 30 days. Hanson stated the Princeton City Council has not provided a detailed plan on how that transition would occur.
“The commission believes the council has minimized the level of effort that would be necessary for such a takeover,” Hanson stated, adding individual commission members and the general manager have consistently taken the position they expect PILOT negotiations to continue and the issue will ultimately be resolved.
“The commission believes the solution needs to be beneficial to both organizations, and based on agreed upon metrics, calculated using an easily understood methodology, and be administratively simple,” Hanson added.
Both parties should value financial payments and in-kind services, he stated.
“These are important goals and the PILOT ad hoc committee needs time to complete its work,” Hanson stated, adding any referendum or ballot question was not in the best interest of ratepayers, taxpayers, the city, or utility staff.
“I recommend the council vote against this referendum and focus on working together to strengthen and improve this community – not destroy a system that has worked well for this community over the last 109 years,” Hanson concluded.
City Administrator Robert Barbian recapped the ad-hoc PILOT committee meeting, which had occurred earlier in the day.
The city previously received a payment “in lieu of” tax from PPU to offset taxes that a private electric company such as Xcel Energy would pay if it provided electric to the city.
In 1997, Princeton Utilities agreed to pay the city $4,375 a month or $52,500 annually. Commissioners unanimously voted March 25 to discontinue payment in lieu of taxes (PILOT) after a lengthy and sometimes tense discussion that included mention of the city’s franchise fee and the PUC’s cash reserve policy.
Ad hoc committee members in attendance Friday morning included Barbian, Zimmer, City Finance Director Steve Jackson, Butcher, and Hanson.
Zimmer said the meeting was the fourth the group had completed.
He reported that a level of trust had been established and both parties had agreed the funding for PILOT should be based on gross PUC revenues has for the year, and that there would be an adjustment automatically made based on a July 1 audit report.
That adjustment would take place and entail a three-year rolling average.
A second point of agreement was intergovernmental support regarding labor.
An annual schedule of costs for labor and in-kind services involving the two parties would be approved administratively and billing would occur, Zimmer said.
Finally, PPU had agreed to resume PILOT payments to the city effective Sept. 1, 2020, in the amount of $4,000 per month through July 1, 2021, Zimmer said.
This would allow time for the ad hoc committee to work in establishing a long-term PILOT program that would be beneficial to both organizations, Zimmer said.
“We felt that this was a good step forward in establishing a cooperative arrangement that moves both entities forward to a mutual, long-term agreement that’s beneficial,” Zimmer said, adding that he and Hanson were recommending the city council not place a question regarding the abolishment of the Princeton Public Utilities’ three current commissioners on the Nov. 3 election ballot.
“This proposed agreement is in good faith, showing that we want to work with the PUC to establish a long-term PILOT that’s satisfactory to the city and for the public utilities,” Zimmer explained.
Gerold asked if about specific dates and what was considered long-term. Barbian replied, “I’m trying to recall whether or not there was a comment made [regarding that], and it only would have been a comment. I don’t know if we got that specific.
Schumacher then asked which party had produced the summary.
Barbian said that he had penned the document, adding after it was produced, the document was shared with everybody who had sat on the ad hoc committee.
Mayor’s Key Points
Schumacher replied, “This is not on Princeton Public Utilities letterhead, this has not been signed by Greg Hanson, the chairman of the PUC. Am I right?”
Barbian said that was correct. Schumacher was concerned about the lack of an official resolution from Princeton Public Utilities to reinstate the PILOT program.
Zimmer offered this response: “I can see where you are going with this. If I could have shook hands with Mr. Hanson, I would have shook hands.”
Schumacher replied: “Handshakes aren’t checks.” Zimmer said the point of the matter was both parties had come to an agreement regarding PILOT.
“I believe you can trust Mr. Hanson that he will follow through on our agreement today. I also talked with Mr. Erickson, He has informed me, that if Greg agreed to this at our meeting, he definitely would be in agreement,” Zimmer said.
Schumacher replied, “But you still don’t have a document that shows they are willing to put this into a resolution to be approved, and no revenue percentage.”
Zimmer said the summary that had been presented was designed to keep negotiations open and prevent a Nov. 3 ballot vote. “I think we can come up with a solution that’s agreeable by July 1, 2021. In the meantime, the city would continue to collect $4,000 a month in a good faith effort by PUC to the city.”
Schumacher wanted the PUC to provide past due PILOT payments from March through August.
“Actions speak louder than words, and their actions don’t have money behind it,” he said, “Why isn’t [Hanson] offering to pay the past due?”
Zimmer replied, “Statutorily, they don’t have to pay anything to the city.”
More From Council
Gerold said she didn’t see how the PUC could go back on the agreement.
“This is pretty straightforward. I did hear from [Commissioner] Dan Erickson as well and he told me whatever the ad hoc committee came up with, he would support 100%,” she said. “I trust you, Jules, and I trust they will resume PILOT, but this is a discount from the $4,375 a month they were paying. It was $52,500 a year.”
Zimmer agreed with Gerold about a $375 discount being present.
Gerold added: “The problem that I have is I don’t know if I trust the current PUC board and general manager to continue to make the decisions. I worry about the next thing they are going to come up with. I feel that they have shown in the past that they don’t make good decisions based on what’s best for the community but what’s based on their emotions and feelings. My only recourse would be to do anything in my power in whatever we decide this afternoon to get the PUC board changed to a five-person board. We should petition with the state to do that.”
Gerold said the city could always decide not to renew the commissioners’ terms.
“Completely switching the board around would be the only thing I would have comfort with. I don’t have faith in the way they make decisions,” she added.
Edmonds said he would support a five-member commission, adding he had approached Rep. Sondra Erickson about carrying such legislation. “She said yes, by all means, but it would be in 2021. It would not be done this year,” he said.
Edmonds said he would present Hanson’s statement publicly. “I’m going to make sure every address in this town will get it,” Edmonds said, adding, “We have people here who want to speak, and you have denied them that,” directing his comments at Schumacher, Gerold, and Reynolds.
Reynolds said he had read Hanson’s letter.
“Whether they believe the public utility should be abolished, we are not making that decision,” he said. “We are making a decision whether or not this goes on a ballot. I think it’s good information. People need to have all the facts and then they can decide.”
Schumacher said the city of North Branch let its citizens have a voice at the ballot box first. “If you let the people of the community decide, and they want to keep the commission going, and the next level would be to go to five commissioners, why are we slowing down having the people of the community have a voice?”
Gerold said a PUC board member told her he agreed the issue at hand should be placed on the ballot. She currently serves as city liaison to the PUC.
“This is close,” she said. “I don’t want to give up the PILOT money for the rest of the year.” Gerold said she also called Commissioner Richard Schwartz, who agrees with the PILOT concept.
“He wants to bring it back, but after the election,” Gerold said. “Mr. Hanson has told me numerous times that he agrees with PILOT and wants it to come back.”
Gerold added that she had heard that the PUC had no intentions of doing anything until after the election. “What’s best for the community is not in the forefront of their mind. That’s not the best way to run a serious business.”
More From Mayor
Schumacher said other communities run their public utilities. He named as Litchfield as an example.
“Again, it would not be the city council abolishing the PUC,” he said. “It would be the voters of our community, the community that we represent. I’m not scared of what our community members have to say, I embrace it. Let’s see what the community really thinks. North Branch went to the ballot and the decision was made. Then they went to the next step of a five-person board,” Schumacher said.
Edmonds said the city council was rushing a decision, and was making a mistake in not allowing public comment and not allowing Hanson’s statement to be read.
Zimmer said two PUC commissioners told him they would not be afraid to see the question on the ballot, but were concerned debate regarding such a ballot question could tear the community apart.
“A person told me they didn’t elect me to oversee a multi-million dollar utility company,” Zimmer said. “They elected me to oversee what a council oversees, not electric and water.”
Schumacher said Hanson’s comments about the city’s inability to run the PUC downgraded Zimmer, noting Zimmer’s past county law enforcement experience.
Schumacher added: “This isn’t about Princeton Public Utilities employees. This is an issue of management not looking out for the best interests of our community. It just seems weird to me the past due PILOT payments are missing. They shorted us. They agreed money should be there, and then they short us $375 a month.”
Zimmer commented that the entire issue with PILOT was being blamed on a “knee-jerk” reaction by commissioners during their March 25 meeting.
“If the council approves this resolution [to place a question on the Nov. 3 ballot], it’s a knee-jerk reaction that’s huge. It’s more than that,” Zimmer contended.
Gerold replied the council was under a 4:30 p.m. deadline to get a question on the Nov. 3 ballot.
Zimmer replied, “Shouldn’t we have been discussing this two months ago?”
Schumacher said the council had been talking about PILOT for months.
“The general manager and the chairman of the PUC have been performing professional stall tactics,” Schumacher said, holding up the ad hoc committee document, stating it had been delivered 15 minutes prior to Friday’s meeting.
Schumacher stated that Commissioner Dan Erickson made a knee-jerk motion March 25 to discontinue the PILOT. Schumacher alleged that Erickson made his decision based upon “untruths” stated by General Manager Keith Butcher regarding Princeton’s exclusivity regarding use of franchise fee and PILOT.
Schumacher contended that Hanson and Butcher had stated that nobody in the country pays both a PILOT and a franchise fee.
“That’s not true,” he said. “Just look to our neighbors to the south. Elk River does it.”
Regarding the clock ticking down on the council making a decision on the ballot question, Schumacher said the special meeting had been set up eight days in advance, with an hour-and-a-half to get information to the county auditor.
Zimmer replied: “Never have we talked about putting such a topic of importance on the ballot. We have never talked as a council about this topic until last Thursday. Don’t you think maybe, just maybe, something of this importance should have been brought up two months or three months ago, mayor?”
Edmonds took Schumacher to task regarding his franchise fee and PILOT statement involving Hanson and Butcher. “What you left out was that they included a ‘to the best of their knowledge’ when making that statement,” he said. “They qualified their statement, and when informed, they corrected it.”
Edmonds then became critical regarding Schumacher’s past comments made about the PUC.
“They have been under vicious attack from you for the last three years,” Edmonds said. “They have had a total turnover, getting a new general manager and three new commissioners. You endorsed every one of those people or voted for them. Now you are trashing them. That’s where we are at.”
Schumacher didn’t respond.
Zimmer said the entire situation was amenable and fixable, and the city council didn’t have to put the community through a ballot question.
Reynolds said the city did have an agreement, and the PUC broke it without input or any warning.
Gerold said if the Princeton council did put the question on the ballot, it would be “interesting” to find out if people thought the current commissioners were doing a good job or if the city council would do better for them.
“If they do choose, and not for a permanent change, at least we [the council] could run it and make decisions until we get a five-person board. The commission could be reestablished. We could also look at other options,” Gerold said.
Zimmer blamed the PUC’s “knee-jerk” March 25 reaction directly on Schumacher. “One individual has been pounding away at PUC for nearly two years,” he said.
Gerold then replied, “What if the mayor is re-elected? Will the PUC’s bad, emotional decisions go on for two more years? That’s what I’m worried about.”
Schumacher commented, “Have we reached the conclusion that reduction of PILOT is based upon the fact that I’m the mayor? What you are saying is that the disdain of one person is the reason that public utilities decided they were no longer going to pay the PILOT program to punish the people of our city?”
Zimmer said Schumacher’s directing city staff to put a ballot question on the Aug. 13 agenda for council discussion and action didn’t really help matters.
“What about the next three decisions they make because they don’t like the way the wind is blowing?” Schumacher asked. “I was elected in an open and free election to be the mayor of Princeton. The people came and voted for that.”
More PUC Allegations
Schumacher then stated the following, directly referring to the PUC: “Well, Princeton Public Utilities hates the mayor, so let’s take advantage of the people and make the Princeton Park Board close the splash park, we’ll make the park board not put the new playground equipment in at the Civic Park, because we will create budget crunches to get what we want as quid pro quo,” he said.
Edmonds then praised PPU employees for their hard work and dedication during recent power outages, specifically one that occurred on Father’s Day.
Splash Park and PILOT
Schumacher said PPU management would use employees as a shield to defend its decisions, again stating the Princeton Park Board shut down the splash park because of PILOT-induced budget cuts.
Edmonds and Zimmer strongly disagreed.
Edmonds then replied, “That’s absolutely false.” Zimmer added, “You’ve just said something that’s not true.” Edmonds added, “It closed because of COVID-19.”
The city posted the following on its Princeton Splash Park Facebook page on June 3: “Due to COVID-19 guidelines the Splash Park at Mark Park will remain closed until further notice. The park board and emergency management are considering all factors surrounding the Splash Park from social distancing protocols, staffing, and many other factors in the best interest of the community. A final decision has not been made at this time. Please check back for future updates.”
The city’s emergency management team includes these fire, public works, and police department representatives: Director Ron Lawrence; Deputy Director Bob Gerold; and Deputy Director Todd Frederick.
A month later, on Aug. 4, the following Facebook post appeared:
“The Splash Park is closed for the season. We look forward to seeing you all again in 2021. Due to social distancing guidelines the City of Princeton Park Board has decided to keep the Splash Park closed for the 2020 Summer Season.”
In a June 8 email, the Union-Times initially asked the Emergency Management Team to provide an update on the Princeton Splash Park and COVID-19.
Princeton Park & Recreation Board minutes from June 22 included a staff report from Public Works Director Bob Gerold, who brought up the splash park opening due to the changes that had occurred in state virus prevention requirements.
Gerold reported in his research, some cities were opening splash pads, while others were not.
Park Board Member Jill Papesh stated the board decided in previous meetings to not open the splash park due to the virus, social distancing requirements, limiting crowds, and the difficulties of balancing all requirements.
Papesh also stated that the funds from the splash park were also reallocated to the Riebe-Riverside Park grant due to previous funding issues with that project.
The Union-Times sent an open forum request on Thursday, June 25, prior to the Princeton City Council meeting the same evening, asking for city staff to provide an update on the splash park being closed.
City Clerk Shawna Jenkins forwarded the request to EMT leaders Bob Gerold, Todd Frederick, and Ron Lawrence.
During the council’s June 25 meeting, Gerold reported that the splash park had been discussed.
He addressed how some cities were opening, and some were staying closed.
Gerold stated the splash park was not a money maker, and with the city operating under Centers for Disease Control recommendations, the park would not be able to open to full capacity, so the city would lose more money.
Gerold reported that the park board determined that to be fiscally responsible, it would not be practical to open the splash park this year.
Edmonds disagreed and said that he felt the Princeton Splash Park was also an amenity and it should be open to the community.
Councilor Jenny Gerold replied that on a good year the splash park usually loses approximately $30,000. She stated it would be fiscally irresponsible to lose even more with a tight budget.
A Question is Asked
The Union-Times asked a question during the June 25 city council meeting about COVID-19 requirements affecting the Princeton Splash Park.
Gerold, Frederick and Lawrence agreed to put together a memo and provide it to the newspaper.
Gerold responded via email on Tuesday, June 30.
His informational email about the non-opening of the splash park contained six bulleted items, presented in this order:
PUC stopped the PILOT to the city; city staff was tasked with cutting $40,000 from the budget; ideas were presented to council; council agreed that police/fire were essential with no funding cuts, and parks were non-essential and the best area to look.
This information was presented to the park board for options, with discussion consensus that in a good year the splash park would lose $31,000. With COVID-19 restrictions, the splash park could have potentially lost more than double that, Gerold stated in his email.
The park board recommended to close the splash park for the entire season.
Open Forum Part II
At the end of discussion, Zimmer made another attempt to get the council to consider a vote to allow for open forum, acknowledging three people outside of city council chambers who had expressed a continued desire to speak out.
“It’s not going to take that long,” Zimmer said. “If you want to hear from the public before you make this decision, I would ask that you allow open forum so that the citizens can speak.”
Zimmer then made his second motion during the meeting for open forum which failed on a 3-2 vote.
Schumacher, Gerold, and Reynolds voted against, with Edmonds seconding Zimmer’s motion.
Resolution Gets Vote
Schumacher then asked the council to consider adding a resolution to the Nov. 3 general election ballot to abolish the Princeton Public Utilities Commission according to state statute.
Edmonds again stated he wanted Hanson’s statement read into the record.
Schumacher said all council members had read the statement, and that the Union-Times newspaper had been presented a copy before the council meeting.
“Mr. Hanson’s request to read the statement was not made in writing,” he said.
Schumacher made a motion to approve the Nov. 3 ballot question. Reynolds seconded. Edmonds then asked for a roll call vote, which tallied as follows:
Schumacher, Aye; Reynolds, Aye; Gerold, Aye; Edmonds, Nay; Zimmer, Nay.
Final Actions Taken
Toven then presented the council a pre-prepared resolution calling for the Nov. 3 ballot question asking if Princeton Public Utilities should be abolished.
The council voted 3-2 to approve, with Edmonds and Zimmer voting against.
The motion to close the special meeting at 4:06 p.m. passed 4-1, with Edmonds voting against that motion.
The ballot question resolution and other documents were electronically transmitted to Mille Lacs County Auditor - Treasurer Eric Bartusch before the 4:30 p.m. deadline, Schumacher told the Union-Times after Friday’s meeting.