City taps into reserve funds to paint civic center and reconstruct the baseball field

MONDAY, MAY 8, 2017 — As City of Tower property owners head to the county cashier’s window to pay their first-half property taxes the city filled its wants list by dipping into the reserve fund. The city approved spending $3,000 to paint the civic center exterior and $10,000 to re-develop the city’s baseball field at its regular meeting Monday evening. The city also scrambled to find funds to lend to Orlyn Kringstad to get his harbor condominium project started.

This project has already experienced a funding gap according to Kringstad’s request for $125,000 and the loan money is needed to pay for architectural, engineering, legal and marketing costs according to April 28 and May 8 letters Kringstad presented the Tower Economic Development Authority seeking $85,396.35 and $125,000 respectively.

Mayor Josh Carlson told the city council that although the city is anticipating a $125,000 grant from the Iron Range Resources and Rehabilitation Board (IRRRB) to cover the loan, the IRRRB, however, has not yet approved the release of the funds.

“I was under the understanding that the funds would be released immediately,” Kringstad said. The grant was approved by the IRRRB on January 26, he maintained. “We really need that for our cash flow,” Kringstad said.

“There are monthly payments to the architect and engineers and we can’t turn letters of intent into purchase agreements without it,” Kringstad said. He claimed that he has 29 solid leads to purchase condominiums and he needs to keep moving forward to turn them into sales.

“I understand but I need to make sure I don’t get us into trouble. We can’t just go to the bank and borrow it,” Mayor Carlson said. Kringstad reported that he had recently talked with IRRRB commissioner Mark Philips and met with Tower Economic Development Authority Chairman Marshall Helmburger earlier Monday and that he was informed that everything was a go. He had presented TEDA with a request for the loan demonstrating that he spent $82,596.35.

TEDA met at 8:30 Monday morning and Helmberger reported that it recommended that the city distributes $125,000 to TEDA. Helmberger said he hopes the city will turn over $125,000 to TEDA and extend authority to disperse the money without having to go back to the council for review.

With the discussion about TEDA on the table, Alderman Brooke Anderson and Alderman Brad Matich questioned why the TEDA meeting was moved to 8:30 in the morning. The Aldermen represent the city council on TEDA and were left out of the vetting process required for Kringstad to be issued a loan from the city. This vetting requires demonstrated repayment ability, credit worthiness, equity commitment and adequate collateral. In its findings and recommendations statement TEDA made no mention of any satisfaction of these criteria. The findings do however note that the budget for architecture and engineering services, marketing and sales tops $681,000. It also reports that the estimated cost of Kringstad’s harbor project is expected to be $6.1 million.

The council, along with Kringstad and Helmberger discussed the details of the conditions which must be met to receive the IRRRB grant.“Are you asking for $250,000 in invoices?” Kringstad questioned. Clerk Keith said the city needs to demonstrate $250,000 in invoices to acquire the grant, $125,000, and that it could loan up to 50 percent of the invoices. It was obvious that there was a lack of understanding on everybody’s part and a lot of irrelevant conversation had been conducted between the IRRRB, Kringstad, Marshall and TEDA. Mayor Carlson expressed his concerns that conversations were being held with the IRRRB outside of the council’s purview. “You need to choose, either me or Linda, but you need to communicate with the IRRRB through one of us,” Carlson scolded.

Alderman Anderson questioned the hastiness in which the city was being asked to give its approval. “I’d rather we wait until we know what is going on,” Anderson said. Her concerns fell on deaf ears. Carlson said that he didn’t want to get in the way of the development. “I think we need to move ahead,” Carlson said. Aldermen Dougherty, Matich and Fitton concurred. The city decided it would utilize money from what it has commonly referred to as the storefront loan program, to provide half the amount of the invoices submitted to TEDA. The city approved a $40,728.18 loan to Kringstad and set the interest at 2.5 percent, over three years.

Mayor Carlson, and Aldermen Brad Matich, Lance Dougherty and Kevin Fitton supported the motion to make the loan. Alderman Brooke Anderson provided the lone dissent. It is expected that Frandsen Bank, on Tower’s Main Street, will manage the loan.

Linda Haugen and Joan Broten, representing the Tower Women’s Civic Improvement Club, appeared before the city council to request funds to paint the exterior of the civic center. The club has chosen a color scheme to match the anticipated Lake Vermilion Cultural Center paint (tan and brick red). Pastor Doug Workman offered to complete cleaning, preparation and painting the civic center with two coats of paint at a price of $3,000 providing the city act immediately as the high-quality paint he would like to utilize is currently on sale. Although the city does not have funds earmarked for painting the civic center this year the council gave its unanimous approval to contract with Workman to complete the painting. It was decided that the money will be taken from the city’s reserve funds.

Reserve funds were also tapped to finance a reconstruction of the Tower baseball field. The council unanimously approved $10,000 for the project and will consult its engineers, Short Elliot Hendrickson on the project.

In other action, the Tower City Council:

• Tabled making any decision on selling the old dump ground property

• Voted to require airport hangar leaseholders to maintain $300,000 of liability insurance on their hangars by January 1, 2018

• Agreed to an aviation fuel discount price, up to 40¢ per gallon, for a new commercial seaplane business which will begin operating at the Tower Airport. The price savings will be made incrementally based upon fuel consumption. Two thousand in sales will earn a 20¢ discount, $3,000 will earn a 30¢ discount and $4,000 will earn a 40¢ discount

• Learned that building a new joint Tower-Breitung fire and ambulance building was very unlikely. The Mayor called to have the city council host a general study session and invite the public to meet with the council and explore opportunities to utilize existing structures in town to accommodate the city’s need to house a fire truck and an anticipated third ambulance

• Approved the wording for a request for proposals to fulfill the projects afforded by the IRRRB Main Street enhancement grant

• Authorized a utility easement, across city land, for T Mobile cellular telephone company

• Stayed the imposition of a liquor ordinance off-sale violation penalty by D’Erick’s Tower Liquors.