Council OKs five-percent preliminary levy increase

TOWER— Balancing priorities was the focus Monday as the city council here approved a preliminary levy increase of five percent for 2025 after a relatively brief discussion.
The decision came less than an hour after the city’s auditor, Devin Ceglar, recommended that the council work to rebuild the city’s financial reserves, which have been on a slow recovery since hitting rock bottom in 2019. At the same time, Ceglar noted the city’s ongoing deficit in the city’s sewer fund and urged the city to adjust rates to address the shortfall.
At the same time, council members made clear that they were reluctant to boost the city’s levy, which can be a tough way to generate additional funds for the city. Currently, every percent increase in the levy raises an extra $4,150. Mayor Dave Setterberg noted that the city would likely need to raise water rates for next year to cover additional debt service for the new drinking water treatment plant, which will put an additional burden on city residents even without a levy increase.
Council member Joe Morin motioned for a preliminary increase of three percent for next year, which would bump the city’s tax levy to approximately $426,000. But council member Josh Zika noted that, by state law, the city can’t raise its levy above the preliminary amount set in September. Cities can lower their levies, and many do, before setting the final number in December.
Morin agreed with Zika’s logic and rescinded his motion for three percent, following up with the proposed five percent increase, which the council approved unanimously. Council members will be reviewing the budget over the next few months ahead of the final levy decision later this year.
Ceglar’s presentation on the city’s audit was largely uneventful. While the city had made some progress in bolstering its general fund, Ceglar said apparent deficits in some other accounts suggested that progress was limited. The audit did include a $190,000 restatement from previous years to account for the city’s decision to transfer management of the Gundersen Trust to the Duluth-Superior Community Foundation.
The city’s ambulance service showed some progress in reducing its deficits, with a $92,000 deficit including $54,000 in depreciation.
Setterberg noted that the audit doesn’t always give as clear a picture of the city’s finances as might be expected because of the way that money flows in and out of the various accounts. “It’s just a snapshot at year-end,” he said.
Ceglar issued his usual findings regarding lack of segregation of duties and lack of control over financial reporting. He also noted that renovations by TEDA at the charter school should have used sealed bids rather than quotes because the total value of the project ended up exceeding $175,000. “That’s something to keep in mind in the future for these close-to-the-threshold projects,” he said. Overall, Ceglar had many fewer findings than in the recent past.
In other business, the council discussed favorable initial reports from soil testing at the site of the rapid infiltration basin, or RIB, system, that the Tower-Breitung Waste Water Board is currently considering. The new system would provide for land treatment of a potentially significant portion of the two communities’ wastewater, substantially expanding total treatment capacity. “The quick update is that the soils are looking good,” said council member Zika, who has a background in wastewater treatment. He said the focus is currently on determining the best location for the facility within the area that has been cleared for the project.
In other business, the council:
• Approved a proposal by AMPTEK to develop a plan for electrical upgrades to the Hoodoo Point Campground over the next several years, at a cost not to exceed $8,000. Campground manager Randy Pratt informed the council that most sites at the campground still lack the 50-amp service that has become the standard for most large RVs. He said some of the smaller 20-amp services still have screw-type breakers.
When questioned by council members, Pratt acknowledged that the campground likely isn’t losing any business as a result of its outdated electrical service. “The seasonals are complaining but we’d fill their lots up no matter what,” he said. Council member Bob Anderson noted that a plan to upgrade the electrical could delay improvements to the campground’s bathroom facilities, which are also in need of repair.
• Set a public hearing on a new zoning ordinance for short-term rentals in the city for 5 p.m. on Tuesday, Sept. 24, with a planning and zoning commission meeting to follow.
• Approved a work plan by SEH to map and give a preliminary assessment of the condition of the city’s stormwater infrastructure. The work, at a cost of $20,000, would not include camera testing the lines for their condition. The work will be funded by a $20,000 grant from the Minnesota Pollution Control Agency. Other MPCA grants could help the city pay for further work on stormwater infrastructure.
• Opted to try using email as a means of reaching city residents with various announcements in the future, rather than using texting for now. The council had considered an app that would have facilitated texting with residents but opted not to pursue that option for now.
• Briefly discussed but took no action on the proposal by the Ely-Bloomenson Community Hospital to create a regional ambulance service to serve Ely, Tower, and Babbitt. “They’re going to need to give the communities much more detail if it’s going to move forward,” said councilor Anderson. “Right now, it’s just a very broad idea.”
• Heard a report on a recent meeting to discuss options for getting the Mesabi Trail to Tower. Councilor Kevin Norby, who headed up the meeting, said it included representatives from several area trail groups who discussed a variety of options. Norby said Mesabi Trail Assistant Director Sarah Ciochetto would try to come up with cost estimates of the options ahead of a meeting tentatively set for next month.
• Approved a motion to accept an IRRR grant to cover the cost of a chip reader at the airport’s fueling station.
• Noted that the new kayak launching dock is getting considerable use.
• Authorized clerk-treasurer Michael Schultz and maintenance supervisor Ben Velcheff to conduct the initial screening of applications for the city’s maintenance assistant position. The city received 12 applications for the position.
• Authorized Setterberg and Morin to serve along with the city attorney to meet with AFSCME union representatives to begin the latest round of contract negotiations with city workers. A separate negotiation is also planned with the city’s ambulance director.
• Approved a short-term lease of the city’s now-empty pole building on S. Second St. by Tinde-USA for storage of building materials. The lease is currently set at $700/month.
• Directed Schultz to send letters to property owners with delinquent utility bills urging them to get caught up before the city applies to have their overdue accounts added to their property tax statements.