Safety Center financing – big update

Tuesday is a big day in the safety center financing process.  The Council will vote on a resolution to approve the lease-revenue financing transaction – we will vote to close the deal, in other words.

The package of documents is 551 pages, but the collection of documents is quite straightforward, so don’t let the size (or the legalese) overwhelm you (nor the handwaving on Locally Grown) The documents itemize the parts of the deal and allocate risks.  To repeat – the documents describe the deal and are intended to allocate the risks among the parties.  Much of the length is from the repetition of relevant definitions and terms in each document, as well as the requirements of securities law which are extensive.

300 of the pages are the 2011 Comprehensive Annual Financial Report (CAFR) which the Council reviewed and accepted in July (the auditor’s presentation gives a quick summary)

Of the remaining 200 pages:

1-5: Finance director Kathleen McBride’s memo which itemizes everything else in the packet – it’s a good summary of who is involved and the documents in the packet.

6-12: The resolution by which the Council authorizes the transaction and approves the financing documents.  The three provisions (repeated throughout the documents) to highlight are (1) these are not general obligations of the City (the full faith and credit of the City are not pledged to pay these obligations), (2) the City must appropriate payment annually (Failure to appropriate funds annually is at the sole discretion of the Council), and (3) the certificates of participation (COPs) are tax-exempt.

13-25: Ground lease

  • Deal: Northfield has already purchased the property for the project – the Cowles property – on Riverview Drive off Highway 3.  Now the City will lease the land for $1 to US Bank for the duration of the lease-purchase deal below.
  • Risks: Since this is about land, the site lease puts the burden for ensuring good title, proper zoning, etc., and no environmental hazards on the City as owner/lessor.  But the meat of it is the termination section: 3 ways the site lease can terminate, all dependent on the lease purchase agreement: (1) full payment of the lease below (that’s the $6.28 million) at the end of the term, (2) prepayment of the lease, or (3) non-payment either by failing to appropriate the rental payments each year or by default (money appropriated but not paid for some reason).  These termination events are repeated throughout the documents.

26-68: Lease-purchase agreement

  • Deal: The City agrees to pay rent to lease the property resulting in the purchase when the obligation is paid (either at the end of the term or sooner if prepaid); the Trustee agrees to lease the “lease property” which includes “the Project” (design, construction, installation, and equipping of an approximately 26,653 sq.ft. public safety center on the site), site improvements, etc.
  • Lease term: date of issuance to April 2, 2033 and expires at earliest of: full payment, prepayment, or non-payment as above.
  • City makes Base Rental payments and Additional Rentals (utilities, insurance, etc.)
  • City operates and maintains the property in an appropriate manner and other typical language about who owns improvements
  • City constructs the project according to Agreement to Construct (below) which stipulates that
  • Trustee holds title to the property until City completes payment
  • Risks:
  • If lease expires for non-payment, the city has 45 days to vacate the site, deliver equipment (personal property or equipment financed with the proceeds from the sale of the certificates of participation) and any monies already appropriated must be paid.
  • If construction exceeds the $6.28 million, the City must pay any excess costs
  • Nonappropriation may be cured by the City within a reasonable time – so, let’s say a Council fails to appropriate funds in the (statutorily mandated) December 15 budget.  New Council takes its seats on January 1 and could pass a budget amendment to appropriate the rent payments and save the deal.
  • The City is not obligated (because it’s not a general obligation) to make payments or purchase the facility.  The risk here is to the trustee, but in practice, the likelihood of the city walking away is extremely low.
  • City has the burden of maintaining the property and using it only in ways that maintain the tax-exempt status of the investment

69-132: Indenture of trust (having nothing to do with indentured servitude which is about the only use of “indenture” outside the legal world)

  • Deal: an agreement between the City (the bond issuer) and US Bank (the trustee which administers the lease for purchasers) which details the rules and responsibilities of each party.  The trustee receives payments from the City, pays the owners, and manages the legal requirements of the securities (which are substantial).  This document is technical securities market stuff.

133-154: Agreement to construct: just what it sounds like

  • Deal: City agrees to construct the safety center; Trustee agrees to pay for it from the proceeds of the sale of the COPs
  • Risks:
  • Fixed Price if the construction costs exceed the proceeds of the sale of COPs, the city pays.  The city may execute change orders in the project, but the maximum price is fixed.  If the project comes in under budget, the city gets that benefit.
  • Scheduled completion date is October 31, 2014 (actual completion date is when appropriate documentation of completion is delivered).  City uses best efforts to meet this schedule, but it is not a default if the scheduled completion is exceeded.
  • Typical construction contract language defining default in the construction (rather than the payments to the trustee) such as the city failing to use best efforts to meet the date, not constructing the building to the appropriate standards, etc.

155-161: Continuing disclosure undertaking: More securities regulation stuff.  The City agrees to provide annual financial information, reports of “material events” and other documentation intended to give securities holders information about risks involved with their investment (I believe this is required for any bond issue).

162-177: Certificate purchase agreement

  • Deal: Agreement for the City (issuer) to sell the entire issue of COPs – the $6.28 million package – to Dougherty & Co (underwriters) to market to investors by means of the Official Statement; the Official Statement (included as the Preliminary Official Statement below and finalized when the deal closes) is the prospectus or marketing material from Dougherty to investors describing the COPs.  Again, securities regulation stuff describing the actual issuance details.  Also sets the COP amount, rate and yield at closing which will take place tomorrow morning.

178 (Preliminary) official statement describes the terms of the COPs and provides extensive information about the City, the agreements which make up the project for which the COPs are sold described above, the rating from Standard & Poors (AA-) and other information intended to help investors make an informed choice about the risks of the investment and its appropriateness for their portfolio.  The risks include the repetition that these securities are not general obligations and the City is not required to appropriate funds which knowledgeable investors would measure against the AA- rating and their review of the City’s financial outlook as revealed in the 300 page CAFR.

The rest of the packet is copies of earlier materials including the authorizing statute, RFP for the underwriter for the COPS and the scoring of the proposals received, timeline, and the statement issued by the Council to inform the public about our choice of financing.

Public Safety Center financing – live blogging the HRA meeting

The next step in the Safety Center financing is approval of the bonding by the HRA (see the agenda and packet here)

Public comments first.

  • Kris Voh, former Councilmember and former HRA member, “after years and years of deliberation” about this project, Mr Vohs urges the HRA to “do it” and approve the funding mechanism.
  • Victor Summa reiterated his request for objective legal advice and opines that the legal counsel from Kennedy & Graven and Ehlers is not entirely unbiased.  He continues to discuss the “statutory slipperiness” and suggests Council member Erica Zweifel who sits on the HRA and all the Council members have a conflict of interest in this transaction.
  • Don McGee (who is a member of Northfield Citizens Safety Center Task Force along with Jerry Anderson, David Ludescher, Joe Grundhoefer, Ken Malecha, and John Machachek)  with a letter in the Northfield News) “concerns of things I think are happening to you” and talks about the interleaving of actions asserting that the HRA approval comes too late (or the Council’s action came too early).
  • David Ludescher, one of my opponents in the Council race, states “we all know what’s going on here” which is, in his opinion, solely to avoid the voters (he asserts this repeatedly as well as misrepresenting the process and burden on the HRA over on Locally Grown).  He continues to tell the HRA this is a “task you’re really not qualified for” and that the Council has made an “unfair request” of the HRA.
  • Patrick Ganey, Council member, notes “loud voices are not always the correct ones” and urges the HRA to act according to the statute which authorizes this action and not be intimidated by a small number of people.
  • Mayor Mary Rossing “we’re all on the same team” and urges the HRA to act for the good of the community and use this “tool you have in your toolbox” (see the Mayor’s statement from the News, too)

Moving on to the first action item which is to authorize that preparation of documents for issuing the bonds and to request the Council hold a public hearing.  Jenny Boulton, of Kennedy and Graven explains the legal status.  Questions from chair Leota Goodney to clarify what might happen if the City decided not to pay (“non-appropriation” is the term – the City would make an annual appropriation to the HRA to pay the debt); the HRA assets would not be available to the bondholders, but the HRA would own the project, the City’s bond rating would suffer, but bond rating agencies view this as a remote possibility.   Ms Goodney also asks about the time commitment for the HRA and Ms Boulton states that the commitment is only the approval process but nothing else.  Mark Ruff of Ehlers addresses the RFP (page 56 in the Council packet for next week) for the sale and the negotiated sale process.

5:50 pm: The HRA gets to discuss…no questions are asked.  Erica Zweifel states that she is “overwhelmingly” in support of the project and the financing mechanism, especially thanking Councilor Vohs.  She also notes that this financing choice IS a response to voters, rather than avoiding them, by acting as many constituents have asked.

Dayna Norvold, who spoke at the Council meeting (see my previous blog post), says the only issue is “does it fit within out mission”? And the answer for her is “no.”  Kevin Fink, “I don’t think this meets our mission” although he is in favor the project and will also be voting “no.”  Susan Crow only states she wished for more time and some concern about ability to manage the information.  Leota Goodney notes she believes the HRA is part of the City and feels she had her questions about impact on the HRA answered. Michele Merxbauer emphasizes the conduit nature of the financing and not adding to the workload of the HRA.

6:10 pm. Competing readings of the statute lead to a discussion of blight.  Ms Norvold has a firmly held belief about what blight is, I think, and I’m guessing it has something to do with delapidation.  Ms Merxbauer points out that the current site can be considered obsolete and blighted as well as the new property, platted 30 years ago, but too small for many current industrial uses. Jenny Boulton encourages a broader use of “blight” and helping development through this financing mechanism.  In response to Kevin Fink and linking the broader mission to housing: public safety is related to the entire community.  Ms Norvold suggests that approving this bond issue would open the door to the HRA being asked to finance many projects.  Ms. Goodney emphasizes that no housing projects are on the horizon – implying that a housing project would be financed first – so it is available.

6:20 pm. Is it worth putting this action off?  asks Ms. Goodney.  No.  Erica Zweifel moves the suggested motion and it fails for lack of a second.  A disappointing result based, I believe, on misunderstanding of the financing authority.  Back to the Council.


Financing the Safety Center – taking the next steps – UPDATED

UPDATE: Mayor Rossing has a column in the Northfield News on this topic.

On June 5, the Council voted to use lease revenue bonds to finance the Public Safety Center, an action which generated much quiet support for acting to move the project ahead directly and efficiently plus a little public outrage from the same small group of Council watchers.

Between June 5 and Tuesday’s special meeting, city staff recommended the HRA rather than the EDA be asked to issue of the debt and the HRA has received an introduction to the project.  Both the EDA and HRA have the requisite authority to undertake this transaction, so the choice is more related to which group is best able to do the job we’re asking them to do. The EDA has new leadership and is rebuilding, but is still short two members and quorum issues are still very real.

Northfield’s HRA has been quietly effective for many years; the HRA’s ability to work collaboratively and finish projects is significant. Dayna Norvold, HRA member, spoke at the meeting and said this request would “totally hijack our agenda” but she gave no specifics to explain her fear. In fact, the HRA board function will be to review materials and take action at the appropriate points in the process.  The work of drafting documents, preparing materials, etc. will fall to city staff, bond counsel and financial advisors.  The programs of the HRA will continue unaffected, their budget untapped and their ability to carry out their fine (award-winning!) work on housing issues in Northfield uninterrupted.  The Council is asking the HRA to let us tap into their financing authority, as do non-profits in town, but not to take over the project.  The burden to the HRA is small.

So, the Council took three more actions to advance the project; all votes were unanimous (6-0; Erica Zweifel was not present).  We approved the form of an RFP for the negotiated sale of bonds, a resolution to transfer funds internally for cash for the purchase of property and other items, and to authorize staff to proceed on closing on the purchase of the Cowles property (the City had a purchase agreement contingent on financing method) in conjunction with the bond sale.

Is this the right horse for our cart?

We were accused of putting the cart before the horse, but I think that metaphor does not capture the situation.  Right now, we’re deciding which horse to pull the wagon (we’re asking to use the HRA horse, a fine steed), what we need to put in the cart (cash for land purchase, plans, etc.) and when the two should be hitched (following HRA decisions, bond sale, etc.).  This project is complex – the multiple steps (which would be present with any financing mechanism, incidentally) must be correlated with particular transactions and decisions.  Coordinating action by the Council with action by the HRA with our respective meeting schedules, as well as making the decisions, negotiating the bond sale, purchasing the land will all happen at the appropriate time, but the truth is that many are executed by staff between meetings or by the HRA at separate meetings.  By having Council approval in hand, the other decisions can be scheduled and made efficiently.

We got more good news from our financial advisor (Mark Apfelbacher of Ehlers) – because this project is for an essential facility and because we are putting dollars in upfront to purchase the land, the debt issuance costs are likely to be lower because, even if lease revenue bonds are not backed by the full faith and credit of the city, this project already has city commitment and the risk that Northfield would not pay its debt is very low.  Combine that with historically low interest rates and this project is a good deal now.

My opponent has accused the city of “not having the courage” to do the project ourselves. Again, the complain is misplaced.  The City is doing the project and (see above) requesting the HRA assist us as the financing conduit; we’re not transferring responsibility for the project or the debt payment to any other group, but will be making an annual appropriation for payment from property taxes.  The only lack of courage I see was the original compromise on CIP bonds – a choice which I think says the Council has believed all along that this was not a project to send to the voters, but were not bold enough to act to use lease revenue bonds at that time.  Now that we have made more decisions about the project – location, scope, carved off the fire organization and vehicle location – we could and did make the clear financing policy decision.

See also: Council’s statement on the choice of financing method (I’m working to make sure this is the first of a series of statements to the public to clarify decisions and push information to residents, rather than rely only on media coverage).

Financing the Public Safety Center-what and why

How did we get here?

The June 5, 2012 Council agenda included 2 items related to financing the Public Safety Center – a public hearing required before the City could issue Capital Improvement Bonds and approval of a resolution authorizing the use of CIP Bonds for the Safety Center.

The hearing was duly held and the Council heard from members of the Chamber of Commerce, NDDC, and interested citizens who asked for the Council to send the Safety Center issue directly to a referendum rather than using CIP bonds.  The Council did decide not to issue CIP bonds, but also decided not to send the issue to the voters.

Procedurally, the meeting was complicated by Patrick Ganey’s absence.  A motion to use GO referendum bonds and the motion to issue CIP bonds both failed on tie votes (Rhonda Pownell, Suzie Nakasian, and Ivan Imm supported both; Mayor Rossing, Erica Zweifel and I voted no).  Erica Zweifel made a motion – not impromptu as the LWV blog called it, but well thought our and justified – to use EDA/HRA lease revenue bonds; the motion was adopted on a 4-2 vote (Yes – Rossing, Buckheit, Imm, Zweifel; No – Nakasian and Pownell.

Statutory interlude about bond types: skip it if you know this stuff.

Under state statute, cities may issue general obligation (GO) bonds for a wide range of public purposes (except operating expenses) which pledge the full faith and credit of the city to payment of principal and interest (which is why municipal GO bonds are considered such safe investments).  GO Bonds usually require voter approval – a referendum – before the City can issue the debt.

Capital Improvement Bonds (CIP bonds) are a type of GO Bond which may be issued only for building or improving a city hall, library, public safety facility, or public works facility; CIP bonds are also an exception to the voter approval requirement, but citizens may submit a petition calling for a reverse referendum.

In addition to GO bonds, there are financing methods which do not pledge the full faith and credit of the city, but instead use the revenue from the project financed to pay the debt.  The Council chose a type of revenue bond on Tuesday: EDA/HRA lease/revenue bonds. Either the Housing and Redevelopment Authority or Economic Development Authority may issue revenue bonds to pay to construct the facility, and then lease the facility to the City.  The City then makes lease payments to the HRA or EDA to pay off the debt.

Back to the “why?” 

My starting point is a firm belief in representative government and not seeking voter approval for essential projects.  But, as I blogged back in 2010, I did not have much confidence in the Safety Center decision making process and particularly not in the information flow for making the decisions.  I have been extremely sympathetic to the referendum advocates because if I struggled with the project, those without a seat at the table would likely be more confused.

Since 2010, I’ve come to believe that CIP bonds are a strange compromise financing vehicle which can lead to the sort of brinksmanship we saw at the Council meeting with threats (very real ones, I’m sure) of a reverse referendum and its “citizen veto” character.  So, there I was, impaled on the fence between referendum and lease/revenue bonds.

Since 2010, and especially since earlier this year, the Council has made significant progress in defining the scope of the project, cost, location, and creating flexibility to address fire department organization, equipment and facilities issues (June 12 worksession includes a discussion of the possibility of creating a joint powers board to govern a fire district which includes Northfield, Dundas, Dennison and the townships who are members of the current Rural Fire association; the last worksession included information on equipment).  So, while the road to get here has been bumpy, we’re nearing the destination and I’m leaning away from the referendum.

The speakers at the public hearing, however, pushed me over the edge toward lease/revenue bonds.  The general message from the public: we are in favor of this project and want it to succeed.  More information was requested by a few, but, as Mayor Rossing pointed out, the City would not be spending additional money to develop more detailed plans and specifications until we know the project will move ahead which requires the authorization to finance it.  I fell off the fence here.

So, the best way to get this project done, provide more detailed information to the public, get our police officers into a facility which helps rather than hinders their ability to protect us, and save time, professional fees, and possibly increased construction costs would be to proceed directly to the project via lease revenue bonds.  The best way to fix the process problems is to determine what we can learn from it and improve it – hindsight can provide quite a lot of perspective on what we could have done better and differently.

Keep nagging us, however, to get information out and even suggest the best ways to do that.  We’ll keep working to keep the project costs down and build a functional, efficient facility.

Safety Center decision making

Yelling "Fire" in a crowded Council chamber

“Safety Center Policy Decisions” is first on Tuesday’s worksession agenda.  The staff memo states:

The City Council has three major policy decisions to make related to the new Public Safety Center:

1. Reconfirm the joint Public Safety Center (PSC) Project

2. Choose a site for the PSC

3. Establish a budget and financing for the PSC project

These are important decisions, but these are not policy problems.  These are concrete, implementation problems.  Unfortunately, the Council has not yet really been clear about the underlying policy problems and I consider myself at fault for failing to articulate questions clearly and not finding ways to guide the discussion more fruitfully.   And, of course, hindsight helps, too.   So, from the acres/tons/volumes of raw information we’ve received, here’s how I’m trying to structure my own thinking for the discussion tonight:

1. Let’s review ALL the capital spending we anticipate: I’d love a user-friendly inventory of all existing capital assets, but simply working with our CIP we can construct a forecast of the capital projects, their cost and approximate timing of expenditures.   So far, we’ve discussed the library (CIP includes $7.6 million in 2015).  Street improvements are a regular item on our agendas, but we’re struggling find ways to catch up with street reconstruction/repair.  Goal: make choices for the PSC which will not adversely affect the city’s ability to maintain and replace other capital assets in future years or at least be able to project the limitations the PSC will create.

2. Let’s determine how much debt we can afford.  We’ve begun to discuss the “how much” issue in relation to our street reconstruction projects, but not for the PSC and future facilities projects and not all together.  For an $8.5 million dollar bond issue, our finance director has projected an annual levy of $600,000.  – this levy amount is about 50% of our current debt levy and almost 3x the total levy increase for 2012.  Where will the revenue to pay the add’l debt service come from?  It doesn’t get any easier when our revenue stream is partly in the hands of the state legislature and its decisions on local government aid.

We need help from staff to bring this information together in a useful form so the Council understands the consequences and so we can clearly explain it to you taxpayers since you’ll be paying for it.  So, if we had knew what we needed to replace when AND had developed guidance on how much debt we should reasonably issue relative to our expected revenue, our budget choices would become a lot clearer.  And, if the budget choices were clearer, I suspect the site, design and timeline would also come into focus.

The other large unanswered question not entirely unrelated to the above:  “Partners”: We’ve talked about our partners – colleges, Dundas, rural fire association – but what sort of relationship are we talking about?  We have a rough commitment for a capital contribution of $500,000 from the rural fire association.  However, the service agreement is decades old and Northfield relies on the rural association’s equipment.

The Council is scheduled to receive an update on our partners tonight.  I’m eager for this update since the Council hasn’t had much information about the details of negotiations, so my more cynical self thinks it looks like Northfield tries to see how much we can get our not entirely enthusiastic customers to pay without giving them a great deal of input on what they’re buying.  So far, contract talks seem stalled.  A bolder alternative strategy would be to create a regional fire district governed by a joint powers agreement for services, facilities and equipment?  It would certainly clarify the relationship, support Northfield’s interest in regional solutions, and perhaps build in a more sustainable structure where all parties have a strong stake in helping the fire district succeed.

Highest and best use

Highest and best use of prime London riverfront?

Mayor Rossing has used the term “highest and best use” in the context of several projects in recent weeks with the latest iteration applied to the proposed relocation of the old depot to the Q Block.  As in: “Would relocating the depot to the Q Block be the highest and best use of that property?”

“Highest and best use” is a term from real estate valuation and appraisal; it is a useful tool for considering land value and a developer’s possible return on investment.

Used casually, however, I’d suggest the term is aimed at defeating or at least questioning the desirability of a project.  “Highest” and “best” are absolute terms, after all, so any doubt about a project tends to create the impression that it is too low and not good enough.  Used in public policy, as when Northfield tries to determine the highest and best use of a piece of property, the immediate analogy would suggest the city is playing the same role as a private developer and maximizing the profit on that specific piece of land.  I’d argue, however, that city government usually needs to look beyond the parcel in question to determine value and that public use of property may not be the highest dollar value, but could be the highest community value.

But, let’s think about this in policy terms relative to current events in Northfield: Depot and public safety facilities.  Here’s a short definition of highest and best use:

The highest and best use generally is the use that is reasonably probable, physically possible, supported by the market, and returns the highest value to the land. The final estimate of highest and best use should be defensible, the logic internally consistent, and the conclusions well supported and documented by facts as well as opinions.

Physically possible:  I’d say this is more like “buildable at an acceptable cost.”  Physically imperfect sites can be made usable by extensive grading, soil correction, flood mitigation, etc. all of which cost money.  Take the Council’s public safety site selection process as an example.

The physical limitations of the current Safety Center site (small, floodplain, difficult highway access) make its reuse problematic at best.   Some have claimed reusing the current building for police would be the most cost effective.  Others have countered that the flood mitigation, renovation of the building, and other site related costs make it too expensive.

For those who wonder why the Council can’t seem to decide on another site for either a combined or separate facility, the physical limitations are the biggest issue.  Of the sites considered, size, topography, infrastructure location (where the pipes and wires are placed on the site), and highway access are issues in each of them.  The Council determined that central location was required; public policy has thus constrained the choice of site and raised the cost.

Supported by the market and returns the highest value: This does not fit neatly into a public sector analysis for a couple of reasons.  One thing governments do is provide public goods.  We levy taxes and use that revenue to provide services for which there is not or should not be a private market.  I’d throw public safety and transit (to a lesser extent) into the public goods basket.  If we have policy goals of providing fire and police protection for all Northfielders (24/7 without a charge per incident) and incentivizing transit use for a variety of reasons (reducing vehicle miles traveled, providing low cost transportation for those without cars, saving fuel, reducing pollution, etc.), using land for facilities for these purposes is unlikely to be either supported by the market or return the highest value.  For the Depot, there is the additional value of historic preservation to figure into the calculations.

Government should consider what market-driven use a public use of the land might displace.  If, for example, we decided to use The Crossings site for public safety (it’s on the list), this land is at a highly visible intersection on Highway 3, but proximate to Division Street and the heart of downtown along with a substantial amount of Cannon River frontage.  It’s well worth considering whether there is a private, revenue and tax producing use which might a higher and better use of this site.

The same question should be asked of the proposed Depot location on the Q-Block.  The Crossings project was supposed to redevelop the old Kump lumber yard site, but economics short-circuited it.  The Q-Block has been talked about as a redevelopment opportunity for decades, but nothing has jump started that process.  Would placing the Depot (which would be privately owned on publicly owned land) on the Q-Block be a useful catalyst for redevelopment or a deterrent?  What else might the City do with its Q Block property?

Defensible, consistent, supported, and documented:  For government, this is key.  We’re spending your money which we take via taxes without asking you whether you like it or not.    The latest Public Safety activity is to form groups to develop “shared facts” about the sites under consideration and about the reuse of the current building (Yes, we should have done this at least a year ago, but it took our newly elected Council members to articulate the need and Administrator Tim Madigan to construct the process).  The outcome, I hope, will be concise information about proposed sites and the current building which will make the Council’s decision making easier and inform the public about how that choice was made.

The Save the Northfield Depot group has done a lot of homework for the Council (see their report in the Council packet from March 15) in terms of documentation.  The Council now needs to use that plus our own research about costs, process, and alternative uses of the site to make a defensible, etc. decision.

And finally, government also has a role in determining the highest and best use of almost all property through our tax policy, zoning regulations, development fees and exactions which add to the cost of any development and create incentives and obstacles to what might be developed.  We should be keeping this fact of governing in mind as we make our decisions to ensure that the consequences are intended.

Another economic development link

One of the elephants in the room

The Strong Towns blog is one of my favorites because of its big picture/local scale approach backed up by real data.   Here’s today’s blog post Starter Strategies for a Strong Town.    I’d love to see Northfield go through these “ten things all local governments should be doing right now to start the transition into a new economic reality”

1. 5 year budget: Interim City Administrator Tim Madigan has proposed and the Council agreed to a two year budget cycle, so we’re moving in the right direction.

2. Base Line Workload Analysis – Essentially, cities need to analyze staffing and workload needs to allocate resources to the most productive way to deliver services.  The ST folks suggest:

Each task that the city and its staff perform should be listed and put into at least three different categories:

  1. Those things that are mandated by the State and Federal Gov’t
  2. Those things that are required by the Council or another public body
  3. Those things that are done exclusively for the staff

Once this task list is assembled, there can be a productive discussion about what tasks should continue, which can be cut, which can be reworked and then how the workload should be distributed. Only then can an informed decision on the needed level of staffing be made.

3. Real Capital Improvements Plan –  I agree with the ST people that “maintenance of infrastructure is the elephant in the room that cities simply can’t ignore any longer.”   They recommend:

A complete inventory of all of the infrastructure currently maintained, its condition, an estimate of its remaining life and an approximate cost for its replacement/maintenance is the first step. With modern GIS and database systems and a cadre of trained volunteers, most of this information is reasonably obtainable.

And I’d add that we should have a complete inventory of all our facilities and capital equipment, too, with the same sort of information.  Indeed, we should have had this information before we ever began our Safety Center discussions.

4. Form-based code throughout historic neighborhoods.  Sigh.  Back when the Comp Plan was being drafted (2006 and 2007), the consultants promised a “form-based code” to go with the plan (the city even sent the city planner off to learn about form-based codes at your expense), but when the draft arrived (from the same consultants, sort of), the result was not form-based, but regulations trying to micro-manage uses.  The Planning Commission has made great progress, but more could certainly be done.

5. New Road and street standards: another cost and value of infrastructure point.  Also supported by the GreenStep cities program in which we are participating.

6. Coordination of park investments with economic development: A point certain to tick off the 1st and 2nd wavers in our economic development circles.

7. Walkability Study

8. Implement an Import Replacement economic development strategy: Another point guaranteed to bother the smokestack chasers.

9. Small business subsidy plan: Or, incentivizing the businesses we are likely to attract as well as help our existing businesses grow.

10. Gov. 2.0 Public engagement platform: this one will thrill Griff Wigley over at Locally Grown who has been hocking me (for years now) about engaging citizens where they are (that is, on-line).  The Council has touched on using social media and upgrading the web-site and the IT plan we are going to discuss tomorrow (it’s in the packet for the worksession) is another nudge in this direction.

Marathon meeting recap – public safety facilities

Turner, Burning of the Houses of Parliament

When last we discussed the public safety facilities, we affirmed that the Woodley site (Highway 3 and Woodley Street) was the preferred site for the fire station AND asked KKE to do some preliminary work to determine whether a joint facility could fit on the site plus provide a proposal for changes to the fee arrangement to account for this change in plans if we moved ahead with a joint facility on the Woodley site.

Continue reading

Referendum postponed

Well, this is an interesting development.  Early Monday morning, I emailed this to Joel Walinski and Mary Rossing:

I have been receiving an increasing amount of feedback on the upcoming referendum and the projects themselves expressing concern about the timing of the projects in light of both LGA cuts plus questions about whether the project is sufficiently well-developed to educate the public and have a successful referendum in the short time frame available.

I cannot support the projects until I can be assured

  • the Council (not the steering committee, design committee or architects) can hold the line on budget and has considered costs in the context of disappearing LGA
  • the Woodley site is available at a reasonable purchase price
  • the possible partners – rural fire, colleges, Dundas – have been brought to the table in any substantial and collegial way.
  • Lifecycle costs have been projected
  • Energy efficiency and other sustainability issues have been addressed.

I do not want to have a failed referendum, but rather would like the Council to consider taking additional time to more carefully address the issues above. In light of Joel’s decision to move on, the City is faced with additional challenges including asking staff to devote more time to finding an interim administrator in addition to managing the on-going fiscal decision-making. I would like to be able to throw my whole-hearted support behind the projects to ensure a large and lasting success for Northfield. I believe we need more time to do this. I would like to stress that I am not advocating for “doing nothing” but a slower pace with room for input from our partners and the public.

I would like to request that the Council consider a motion to postpone the referendum on the police/fire projects. As is the case with this week’s packet with councilor-initiated items, I will be happy to write the introductory paragraph for this item.

As it turns out, I didn’t need to start torching whatever political capital I may have (and with the Mayor and Administrator, I’d say I probably had negative political capital to begin with). Continue reading

Dundas-Northfield meeting

1st Ward Councilman Jim Pokorney nailed it when he observed that in his 8 years on the Council no other meeting like Monday night’s meeting between the Dundas and Northfield elected officials had ever taken place.

Ostensibly, the meeting was called to discuss the possibility of sharing services to save money.  Mayor Mary Rossing outlined 3 areas for discussion:

  1. Identity: How do we share services without losing our respective identities/do citizens care who delivers services?
  2. Services: What services are we considering sharing and what is off the table?
  3. Next steps: where do we go from here?

“Identity” was really Dundas’ identity.  Given the disparity in size (Northfield’s population is almost 20,000; Dundas about 1,000), budget, and city staff size, the presumption was, bluntly, how can Northfield deliver services to Dundas without erasing Dundas’ identity?   Asking about identity was an acknowledgment, sort of, that Northfield is perceived as the big bully in the neighborhood.  I appreciate the growing understanding on the part of Northfield that we have not treated our neighbors with a great deal of respect, but anyone watching this meeting could tell that Northfield Council members are still learning.

Services: As there was no set agenda here, the discussion roamed around various services: police, water, sewer, building inspections, planning, fire…and a few relevant distinctions were made and issues raised:

  • “Personal” services vs. “faceless” services: Police protection is highly personal.  Dundas has 3 police officers (Northfield has 22) and, with 3 officers and 1000 people, the connection between Dundas and its own police force is very close.  Attempting to share this sort of service seems unlikely given the loss of identity and connectedness Dundas would experience.  Infrastructure related services: sewer, water, etc. are impersonal and I don’t know of anyone who has a very close relationship with wastewater treatment personnel.
  • How are services provided now…and what might shared? We were a wee bit short on information here.  Dundas already contracts for most of its services; Northfield has in-house staff.  This was a first meeting, so the level of generality was understandable, but I’d have liked to have had some background information on the status quo: how each city provides a service, comparison of rates, what services are good candidates for sharing (because we could realize economies of scale, for example).
  • Popular but undefined and tricky catchphrases: win-win, parity, equity, fair.   It would seem obvious that any arrangement would strive to be fair, but these sorts of terms fall into my category of “trivially true.”  Of course we want to be fair, but what does that mean?  Once unpacked a bit, we found there was some subtext here about perceptions of current unfairness.  Mayor Rossing hinted at disparity in wastewater rates (Northfield pays more) and that the current agreement about wastewater (Dundas connects to our sewer system by MPCA fiat – there are pages and pages of backstory here) is unfair.   Again, without some data, it is hard to evaluate current and future fairness.
  • Capital vs. operating expenses: The new public safety facilities triggered some very interesting discussion.  It is one thing to contract for fire protection (an operating expense) and it is another to ask for Dundas to help underwrite the capital cost of Northfield’s new fire hall.  If Dundas is a fire protection partner and a capital partner, does this mean Dundas can participate in the planning of the facility including limiting costs?   I’m with Dundas on this one: if Northfield wants capital buy-in, we have work to plan the facility together for the best service for all partners at a cost we can all afford; Northfield cannot simply send a bill to Dundas for what Northfield believes is the right price.

Next Steps: Transportation was identified as a prime area for joint planning and execution.  I’ve been arguing for regional transportation planning for years, so I’m on board with this one.  And, a subcommittee of 2 Councilmembers from each city plus staff as needed will be formed to work on these issues further.  Stay tuned.