TOWER— Discussion over the future of the city’s ambulance service was on the city council agenda Monday night as councilors heard from a consultant who is assisting the city in drafting a business plan for the service. Betsy Olivanti, with the Northeast Minnesota Small Business Development Center, presented the progress to date and suggested that the council consider a working session to delve into the details and answer key questions in the coming weeks.
Olivanti noted that the service has undergone significant changes since 2017, which have impacted the department’s profitability. The shift to paid on-call staffing, at significantly higher rates of pay than other small departments in the area, was the biggest factor behind the diminished profitability.
Financial numbers cited by Olivanti helped to illuminate the impact of the new staffing model. In 2017, the year prior to implementation of paid on-call, the service earned a net margin of $102,688. In 2018, after implementation of paid on-call staffing, net profitability fell to just $4,460. That decline in profits was prompted in large part by an 87 percent increase in the department’s expenditures, which jumped from $240,827 in 2017 to $449,389 the following year, according to Olivanti’s figures. While the new staffing enabled the department to earn additional revenue— which increased by 32 percent— it was not enough to offset the near-doubling of expenses.
Profitability improved somewhat in 2019, when the department experienced record emergency call volume. Even so, the 2019 margin of $30,877 was well below prior levels and likely won’t be sustained in 2020. Call volume fell sharply in March and April of this year as a result of the outbreak of the COVID-19 pandemic, although volume has returned to more normal (but not record) levels in June and July, according to the city’s ambulance director Dena Suihkonen.
Even so, emergency calls are down 13 percent this year over 2019 levels, while total call volume, including non-emergency transfers, is off 25 percent.
“Based on the first six months, we expect revenues to be substantially less in 2020 than last year,” said Olivanti.
Olivanti said the city needs to determine its objectives for the ambulance service as part of finalizing the business plan, noting that even with a margin of nearly $31,000 annually, the department could face financial challenges to replace ambulances on a timely basis.
“If you’re looking to replace a rig every so many years, $31,000 is going to take a little bit to get to that level which is why you have service agreements for the rig replacement,” said Olivanti.
She said the business modeling will examine various staffing models to determine the financial implications of each, in order to determine how to move forward. “Then we’ll run various scenarios around that,” she said. “Then you can make some really good decisions and have some really good transparency out there for all of the communities you serve.”
Council members agreed that they’ll need to make key decisions soon as the city begins to plan for its 2021 budget. They indicated they would confer to set a date for a working session devoted to the ambulance service.
In related action, the council gave its blessing to a new ambulance replacement subsidy agreement between the city and several area townships. The new agreement obligates the city to provide substantially more financial information to participating townships than it did in the past. It also keeps the per-capita payment the same, at $15 annually, which will generate an estimated $39,870 per year for the dedicated ambulance replacement account.
Under the agreement, the city also agrees to contribute $1.66 per mile traveled for non-emergency hospital transfers to the ambulance replacement account.

Planning and zoning services
After considerable discussion, the council approved hiring Tony Jeffries to assist the city in working on the Rose RV Park zoning issues and possible changes to the city’s zoning ordinances. Volunteer zoning administrator Mary Shedd said she lacks the experience and knowledge to address many of the zoning complexities raised by the Rose project. Jeffries, who also works as a contract zoning administrator for the city of Eveleth, was the only individual to respond to the city’s recent solicitation for the service. He will charge $98 an hour for his work.
Councilors raised concerns about the cost of the service, although Shedd noted that hiring Jeffries would likely reduce her need to consult with the city’s law firm and SEH, both of which charge more per hour.
Clerk-Treasurer Victoria Ranua said the city has an obligation to address issues raised by the Rose project, many of which are due to a poorly-drafted zoning ordinance. “We’re, in a sense, having to pay for the errors of the past,” said Ranua. She noted that the city’s planning and zoning commission is currently working to revise the city’s zoning ordinances.
In hiring Jeffries, the council put a cap of $5,000 on spending for his services without further council action.

Wastewater treatment capacity
The council also reviewed steps currently underway to address the lack of wastewater treatment capacity to accommodate new development. Council member Dave Setterberg, who is spearheading the issue, noted that the city has hired a service to clean and camera a portion of the city’s sewer system. The company has already discovered three major issues in a portion of the city with the newest infrastructure, including misaligned pipes, distorted pipes, and a pipe that was pierced by a fiber optic cable conduit.
He said the city will also be conducting smoke testing on Tuesday, Aug. 25, which they hope will reveal other places where fresh water is leaking into the sewer system and consuming a portion of the city’s wastewater treatment capacity.
Setterberg said the city is also planning to hire an inspector to assess the status of the septic mound system at the airport, which used to serve both the airport and the Hoodoo Point Campground. “Those mounds were never declared to be bad,” he noted and said they may still have “plenty of life in them.” He said bringing those back online could be one means of adding treatment capacity or reducing city expenses, perhaps by reconnecting the airport to the mound system first, then possibly reconnecting the campground if the mound is still compliant. “The mound system was rated at 9,500 gallons daily, so they’re big,” said Setterberg.

Other business
In other action, the council:
 Heard an update on the city’s coronavirus relief funding. Ranua noted that the city received $36,992 in pandemic funding but questioned whether it will show documented expenses that high. If not, she said, any unused funds will need to go back to St. Louis County.
Ranua noted that some cities are using excess funds to provide relief programs for local busineses and she estimated that the city might have about $12,000 from its allotment that could be used for that purpose. The council took no action, but will have to decide what, if anything, it wants to do with the funds by Dec. 31.
Heard a proposal from Dan Broten for the Prospectors ATV trail group to re-established a former ATV trail on the north side of Tower. The trail used to connect Tower with the high ground north of town and eventually to McKinley Park. The council gave its unanimous approval to the plan.
Approved a motion to solicit bids for propane for the coming heating season. The bid request will clarify that the city will not be offering to extend the contracted propane price to city employees as it has done in the recent past. Ranua noted that the city had failed to account for the fuel discounts in the past as a taxable fringe benefit. While she is now tracking the value of that benefit for employees, she said it’s a significant administrative burden. She also noted that the benefit isn’t provided equally to employees, since not everyone heats with propane.
“If you want to do something for employees, the city should find a more equitable way to do it rather than tie it to employee discounts for propane,” she said.
• Approved a new land use permit application form, based on St. Louis County’s form.
• Gave council member Setterberg the green light to continue his investigation into the calculations of the ambulance service’s fund balance by the city’s auditor. Setterberg said his initial examination has found significant discrepancies which he would like to discuss with the auditor and other third parties to better understand.
• Approved extending double-time pay for ambulance staff for the following holidays in the second half of the year: Labor Day, Thanksgiving, Christmas Day, and New Year’s Eve afternoon and evening.
• Agreed to post a new ambulance supervisor position, which will take the place of two assistant director positions that used to exist on the service.
• Approved a resolution to accept $50,000 in grant funds on behalf of the Tower Economic Development Authority for a COVID-19 relief loan program for local businesses.
• Heard from Mayor Orlyn Kringstad on blight. Kringstad noted that the city had received several blight complaints in the past month and that those residences subject to complaint had received blight notices.
• Noted that Tower Ambulance emergency medical responder Steve Freshour had recently passed his testing to be certified as an emergency medical technician, or EMT.
• Approved the posting of a vacancy on the Tower Economic Development Authority board left by the resignation of Joan Broten.