TOWER— City officials here rejected a proposal by the state’s Public Facilities Authority, or PFA, that would substantially increase the cost to local ratepayers for the new drinking water treatment plant currently being installed to serve both Tower and Soudan.
For more than a year, PFA officials had indicated that the joint Tower-Breitung Waste Water Board would be responsible for repaying a loan of approximately $1.04 million. But based on their latest calculation, Tower and Soudan would be responsible for repaying $1.76 million in loan, a 40 percent increase that ratepayers in the two communities would be required to repay.
The rest of the $10.7 million project is slated to be paid for through a combination of state and federal grants, including $3.375 million from the Army Corps of Engineers.
“An additional $700,000 is a pretty hefty loan,” said Tower Clerk-Treasurer Michael Schultz. “We’re trying to figure out what happened.”
It turns out, it may have been an error by the PFA. According to Schultz, the new higher loan amount is based on the average household income in the communities served by the project. In making that calculation, the PFA used the median household income for all of Breitung Township, which includes a substantial amount of high value lake property which is not served by the project. Schultz noted that the law states that the loan percentage is based on the average household income in the area served by the project, which would be limited to the city of Tower along with Soudan, where household incomes tend to be lower than on the lake.
Schultz said city officials are now working with PFA in hopes of getting the authority to recalculate the loan amount using the right household data. “We all feel that through this process, it should get adjusted,” said Schultz, although he acknowledged it may not go back to the original loan amount in part because household incomes in Tower appear to have increased more than expected over the past few years.
In the hope that the loan amount will get changed, the council opted to reject, at least for now, the agreement with PFA that included the larger loan amount.
The delay in obtaining the PFA funds, which include a combination of grants and loans, is having some impact on the city’s ability to pay for the ongoing work by Lakehead Constructors. The company is currently floating a portion of the billable costs but is charging interest for doing so.
The council did agree, however, to pay a $143,000 pay application from Lakehead for a portion of the work to date.
Fire department concerns
In other business, the council discussed the status of their ongoing review of the city’s fire department. While the council had discussed a third-party review of the department’s operations, Schultz said city officials have held off on that for now. “We did determine based on our own review, that a third party coming in is not necessary yet,” said Schultz.
“We’re still addressing some of the obvious items. After we’ve addressed those, we could still bring in a third party.”
Schultz said department equipment has been inventoried and an initial vehicle inspection was scheduled for later in the week. He said new vehicle batteries had been purchased and that the existing batteries appear to work as long as they are plugged in. Batteries became an issue during a fire in the city in January when the departments main engine couldn’t be started due to a dead battery.
Council member David Wanless urged the council to insist on updates of the department’s operating guidelines and maintenance checklists, along with council oversight to ensure that the department continues to maintain vehicles and equipment, and documents those efforts. “There doesn’t seem to have been a lot of oversight of this,” said Wanless. “Ultimately, it’s up to the council to make sure these things are done.”
Wanless also questioned whether the department is even viable given the limited number of firefighters. “Do we even have four members?” he asked.
The council was able to add at least one new member to the department this week, when they approved the hiring of McKenna Villebrun as a new firefighter, contingent on her obtaining all the required certifications.
In other business, the council:
•  Heard public input from resident Laura Garafolo, who urged the council to provide a more open and inviting atmosphere around its public meetings. In the past few years, the council has changed the layout of its meetings so council members face each other rather than the audience, which had been the case in the city for decades. Garafolo suggested nameplates as well, so residents would know the names of council members. “It seems like everybody would appreciate it if it would be a more friendly atmosphere,” she said.
•  Heard that the city has received a $482,000 grant to fund sewer, water, and electrical infrastructure for the first six housing units at the Marjo RE property along the East Two riverfront.
•  Heard from local HVAC professional Steve Tekautz on replacing the heating system at the civic center. Currently, the center’s fuel oil boiler is no longer working, leaving only electric baseboard heating for now. Tekautz said shifting over to a propane boiler system would entail upfront cost, about $44,000 based on his estimate, but would save money in the long run. The city had received two other quotes for differing options from two other HVAC contractors in early 2024, which ranged from $35,566 to $52,300. The council directed Schultz to work with public works supervisor Ben Velcheff to obtain updated quotes and come back to the council with a recommendation on how to proceed.
•  Approved a motion to put the city’s 2013 ambulance up for sealed bids, with a minimum bid to be determined after more research by Schultz and council member Kevin Norby.
•  Authorized application for grant funding from the Minnesota Housing Agency for infrastructure funds for a planned mixed-use development at the city’s harbor. The Tower Economic Development Authority will be taking the lead in the grant application.
•  Approved a letter of support to encourage Gov. Tim Walz to appoint St. Louis County Commissioner Mike Jugovich to the Legislative-Citizen Commission on Minnesota Resources, or LCCMR.
•  Discussed but took no action on a change in the rental policy for the city’s civic center. A revised version will be back on the council agenda next month.
• Discussed revisions to a pending new city ordinance establishing the Gundersen Endowment Fund Committee, particularly the qualifications for membership on the five-person board. A revised version will be back on the council agenda in April.
• Heard from council member Joe Morin on the Tower-Soudan Historical Society’s many activities and accomplishments over the past year. Morin had requested that the group’s annual report be included in the council packet so council members could see how active the organization has become.