Council weighs support for ECR

ELY— The city council here, on Tuesday, agreed to consider a request for one-time financial assistance from Ely Community Resource, to help them through their temporary financial bottleneck. The nonprofit group provides afterschool activities, summer programs, student mentoring, homework help, basic needs support, and other youth programming. It is one of Ely’s oldest service organizations, founded in 1978.
As ECR explained in its letter to the council, “The state determined to redirect much of its youth program funding into a newly formed department. Unfortunately for ECR and many other youth programs in our state, that new department will not be functional and awarding grants until after July 1, 2025. That has left us with an unanticipated $200,000 gap in our funding for 2024 … For those of you that can help us, we need you now.”
After reading ECR’s letter, city council member Al Forsman contacted the local lawmakers.
“I immediately sent an email to our representatives asking how this happened,” Forsman said. “This is the response I got … from Senator Grant Hauschild: ‘I assure you this is the first time I’m hearing these concerns on the shift to the new agency for children and their families. I have not been made aware of any delays or changes in funding. And if that’s the case, I will definitely look into it.’”
City council member Paul Kess remarked, “I think it’s time we stepped up and did the right thing. Our finances are good … I propose $25,000 to help them get through this crisis.”
The council approved sending Kess’ proposal to the budget committee, which next meets on July 22 at 4 p.m.
Mayor Heidi Omerza emphasized that helping ECR will take more than just the city. “As a teacher,” she said, “I see firsthand all the good things that ECR does. As a mayor, I would like to reiterate that we cannot (bail out ECR) all by ourselves as the city of Ely. We will definitely do our part. I have no problem saying that. But we need everyone in Ely to step up to the plate as well.”
ECR is a 501(c)(3) nonprofit organization. Readers can send donations by check to Ely Community Resource, 111 S. 4th Ave. E., Ely, MN, 55731. Readers can also use the QR code on the ECR website to donate, at elycommunityresource.org.
Cannabis hearing
The city council heard the report from Ely City Attorney Kelly Klun that St. Louis County is now considering its own county-wide moratorium prohibiting the registration and operation of cannabis businesses through the end of this year.
The county’s liquor licensing committee recommended the moratorium to the county commissioners in June. The St. Louis County Board has now scheduled a public hearing on the proposed moratorium, which will be held in council chambers at Ely City Hall on July 23 at 10 a.m.
Klun, in response to a question from the mayor, told the council that the language of the moratorium passed by the Ely council on July 2 was “pretty darn close” to the language of the county’s measure.
2023 Audit
The city received the audit of its 2023 books. The audit report was given by accountant Tom Kelly of Walker, Giroux, and Hahne. Overall, the results of the audit were similar to the previous two audits for 2021 and 2022. Ely received the auditor’s highest evaluation available, “the financial statements were fairly presented in all material respects,” noting that the city had overall good performance, a healthy general fund, and healthy cash flow.
Kelly remarked that the difference in the budget for the 2023 general fund and the actual revenues and expenditures was less than one percent. Ely budgeted $4 million in revenue and $3.91 million in expenditures. Revenues exceeded the budget by $40,997 while expenditures exceeded the budget by $30,484.
Kelly noted that 97 percent of the general fund was unassigned and available for spending on the city’s operations. “Such a high percentage is a good indicator of a healthy cash flow.”
Kelly noted that Ely still suffered from the same two problems identified last year and the year before. “These problems are nothing new,” Kelly remarked, “but it’s our job as auditors to point these out to you.”
First, Ely has inadequate segregation of duties in its accounting practices. He also noted that this is a persistent condition in Ely because the city can’t afford to hire enough staff to completely segregate accounting tasks.
Second, the auditors recommended that the city adjust how much it levies for debt service. “While it appears the city is levying an appropriate amount for debt service obligations not paid by other revenue sources, the city should specify an amount on the final levy that exceeds (debt service) obligations by five percent.”
The auditing firm added a new recommendation this year. “Since 2020, Ely’s residential loan and economic programs have ramped up significantly,” Kelly pointed out. “It is important that loan balances, disbursements, and receipts, are reconciled regularly.” To make reconciliations easier, the auditors recommended that all receipts and expenditures be coded to their own specific accounts “in which no other transactions are coded.”
It is important to note that audits of local governments are not designed nor intended to be forensic tools to find fraud. Audits are to ensure that local governments are following both generally accepted accounting procedures and state laws regarding budgeting.
In other business, the council:
• Heard from Ely Clerk-Treasurer Harold Langowski that the train depot redevelopment project failed to get the grant for the remediation of contaminated soils on the site. “We will reapply again to the Department of Employment and Economic Development in the fall. The owner of the property is still responsible for the costs of the cleanup, but if we can get the grant, we’ll be able to reimburse some of those.”
• Approved advertising for bids for the excavation and removal of contaminated soils at the train depot site.
• Accepted the $11,000 donation of six park benches and the cost of the labor and materials to set them up. The benches are the gift of the Sherpa running app, which is also the principal sponsor of the Ely Marathon. The benches, which will be green, will be placed in different locations around Ely, including in Whiteside Park, Trezona Trail, and Pillow Rock. The donation includes the $650 cost to the city to pour the concrete pad for each bench, according to Langowski.
• Approved the following claims for payment: $104,828 for the city of Ely and the Ely Utilities Commission through July 16; $126,282 for pay estimate No. 1 from Max Gray Construction for the Ely Regional Trailhead Building; $12,330 for change order No. 1 and final pay estimate No. 2 from Low Impact Excavators Inc. for the 9th Avenue East Project; $4,146 for invoices Nos. 96026 and 96037 from AE2S for the Wastewater Treatment Improvements Project and general consulting services from AE2S.
• Approved a lease of vacant land between the city of Ely and Robert and Sharon Mattila for the placement of a residential dock.
• Accepted the resignation of James F. Beaty from the Heritage Preservation Commission.
• Approved Resolution 2024-029 allowing Sportsmen for the Boundary Waters to apply for a raffle permit.
• Approved Resolution 2024-030 allowing the Ely Blue Line Club to apply for a raffle permit.
• Approved Resolution 2024-031 to appoint Scott Kochendorfer as a temporary deputy clerk for the 2024 absentee ballot election periods for the primary and general elections this fall.
• Approved the work request for city labor from the Ely Chamber of Commerce for the Blueberry/Art Festival.