Council OKs zoning permits, sets TIF hearing

David Phillips

The Spring Valley City Council, meeting in regular session Monday, March 9, approved separate conditional use permits for a ballet studio and a five-apartment unit.

The city’s Planning and Zoning Commission recommended approval of the permits with certain conditions after it held a public hearing last week. The council in turn gave unanimous approval Monday.

Holly Hutchens requested a permit to operate a ballet studio at her home on 112 South Washington Avenue, the red brick home that once housed the pioneer museum. Zimmer told the council that there were few comments about this request during the hearing.

The conditions on her permit prohibit anyone other than a member of the household residing on the premises to be employed in the business and limit the hours of operation to 6 a.m. to 9 p.m.

The other request was by Brent Hagan to operate a five-unit apartment building at 300 West Tracy Road in the facility that once housed the Spring Valley Olmsted Medical Center clinic. The conditions included the requirements that all garbage, refuse and scrap parts be in a concealed container within a screened area and that there are two designated parking spaces per unit.

Economic development projects

In other action, the council approved a public hearing on Monday, April 27, 6 p.m., for a new tax increment financing district in the city.

Kappers Fabricating, Inc., plans to expand on a new lot it recently purchased from the city in the industrial park. The lot is to the west of its current operation on the northwest corner of the Sata and Kasten drives intersection.

“You are not approving the TIF plan, you are just scheduling a public hearing at this point,” city administrator Deb Zimmer told the council.

In TIF projects, future tax payments are used to pay for community improvement projects. Cities capture the additional taxes, or tax increment above the original taxes, that results from the increased market value of a project to pay back development costs.

In another economic development issue, Zimmer told the council she had an inquiry on the sale of a lot in the industrial park. The person was aware the council previously agreed to sell a lot for $1 for the relocation of Seabright Electric, but that didn’t happen.

He asked for the same terms, which for $1 he would get the lot with the requirement to put up a 4,000 square foot building. Before the property is transferred, the city would need proof of financing and a building permit, Zimmer told the council.

“All I’m asking for right now is if you’re interested in allowing me to work on a purchase agreement,” Zimmer said. “He does not want to come forward at this time, but will once we get a purchase agreement. So you’re not approving a purchase, just me putting together a purchase agreement.”

If things fall into place, the person indicated he would put the building up this summer. The council unanimously agreed to proceed on working out an agreement.

Audit report

Jason Boynton, of Smith Schafer & Associates, reviewed the 2019 audit report for the council. He worked with Zimmer and Councilor Mike Hadland in putting together the audit.

He presented two letters that are required to state deficiencies. He told the council that there were no issues or problems shown in the audit.

The auditing firm gave the city an unmodified “clean” opinion of the audit, which is the top rating. The opinion provides reasonable assurance that the financials are free of material misstatement.

The only item he brought up is the segregation of financial duties. As has been the case for the past several years, and is the case for most small governmental bodies he audits, “there is a small accounting department so it is difficult to properly segregate duties,” he told the council. The cost benefit of audit controls “doesn’t make sense to hire additional people” to have that proper segregation of controls, he added. “The added cost won’t give us any additional benefit,” he said.

In going through the details of the audit, Boynton pointed out that local government aid (LGA) has remained fairly flat since 2014, which is why property taxes have shown increases during the same span as costs of running the city have increased. The levy for property taxes took significant jumps the past two years due to paying back debt on some large street construction projects, he added.

Property taxes, which totaled $1.45 million in 2019, accounts for 47 percent of the total governmental revenue in 2019. LGA, which accounted for 29 percent of the city’s revenue, was $887,681 in 2019.

In 2014, property taxes and LGA were nearly equal, but the state aid hasn’t kept up with inflation, so the gap between the two has been widening, he stated.

He noted that LGA will increase to $920,886 in 2020, the largest increase since 2014. That 3.7 percent increase still won’t close the gap much.

The other city revenue comes mostly from tax increment financing projects to pay for debt service and developer payments as well as fees collected for services, such as electricity and water.

Boynton went through various expenditures by department for the council, using a printed PowerPoint presentation that showed financial specifics. Most areas showed no major changes from previous years.

The audit showed a healthy balance in the reserve fund, which is needed because LGA only comes to the city twice a year in July and December. A portion of reserves is also used for future projects to decrease debt obligations.

The chart on general obligation bonds showed some changes as a recent bond of $5.77 million, far higher than previous bonds, was issued for the recent Washington Avenue/High Street project. Another significant bond is one for $5.21 million for a substation project in 2016.

The five-year projection of principal and interest on all the bonds shows that the next four years will be more than $1.5 million per year before the city gets some relief with one of the bonds getting paid by 2024, dropping the total to about $1.2 million.

In the utility funds, the audit shows revenue from rates is supporting the service operations. The revenue is also servicing all debt requirements and developing needed reserves for future capital projects, Boynton pointed out.

The ambulance fund showed a slight increase in revenue and a decrease in operational costs, leading to a slight surplus after running a deficit for the four prior years.

Before leaving the meeting, Boynton thanked Zimmer for her efforts, saying she does a nice job and the staff likes working with her.

Rental ordinance review

In another matter, Councilor John Dols recommended that the city’s ordinance covering rental units be passed down to the Planning and Zoning Commission for review so members could suggest improvements or additions they would like to see. Since the commission reviews conditional use permits, rental regulations come into play in their decision-making, Dols said.

Zimmer pointed out that any changes would have to come back to the council for final approval. She noted that a public hearing would also be needed to make changes.

The proposal passed 4-1 with Hadland opposed.

Hadland was a member of the council when the original ordinance was approved after a lot of feedback from the community. During the initial hearing in 2012, local residents filled the council chambers with the majority of people speaking — mostly landlords — objecting to the proposal that was then denied by the council.

However, in 2014, after complaints about specific rental conditions were aired to the Minnesota Department of Health, the council took up the issue again. After another standing-room only public hearing, the council changed some of the wording in the second proposal and adopted the ordinance that is in effect today. The ordinance went into effect July 1, 2014.

Other business

• Approval was given to allow emergency medical technicians (EMT) to attend an out-of-state conference in Las Vegas. EMTs are given a $500 cash bonus for recording more than 1,500 hours of on-call time, but they requested the bonus be used for educational purposes instead. Ambulance co-director Mike Zimmer said attending the national conference would be cheaper than attending a Minnesota conference in Duluth due to mileage reimbursement. The council is required to sign off on out-of-state travel.

• The council approved a transfer of $300,000 from the general fund to the capital fund for street improvements in 2020 and future projects, such as Fremont Street, that will help alleviate some debt by providing cash to pay for costs.

• In department head reports, Parks and Rec director John Fenske thanked all the coaches who volunteer for winter rec. He also gave special thanks to Jim Edgar who kept the ice at the hockey rink during the winter. He also thanked maintenance supervisor Chad Hindt for keeping the rink clear. Fenske is now preparing for summer rec.

• Hindt said his crew has kept busy with various projects. He noted that he tried to go out and clear the trails, but there was too much snow and ice to make much progress.

• Aaron Hamersma of the wastewater treatment plant said the crew will start disinfection season soon.

• Ambulance co-director Sue Puffer said it has been busy with 44 calls last month. Also, a Harley Davidson group out of Rochester asked about holding a ride in July to raise money for the service. The money may go toward new monitors or a power vest. The two people in class are doing fine, she said, and the people in orientation are working well.

• Fire Chief Troy Lange said the department is looking for new members to replace some openings due to retirement and, in one case, death.

• Sgt. Derek Fuglestad had little to report, but Councilor Chris Danielson asked about winter parking. Hadland told her the officers are more lenient about on-street parking when the snow is melting due to muddy yards. However, she was inquiring about a trailer staying parked on a street, and Hadland said the officers would take care of it.

• In the administrator’s report, Zimmer asked and received approval for a raffle permit for the Spring Valley Sportsmen’s Club at the smelt feed in April. She also reported that she has been working with Bolton and Menk, the city’s engineering firm, on a 20-year facilities plan for the wastewater treatment plant. A public hearing will be held next month.

• In council reports, Councilor Luan Ruesink thanked the people who worked on the ice rink because it drew a lot of people out for winter activity.