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Fairmont weighs funding sources to fix streets

FAIRMONT — A new method to raise money for street improvements was the topic of a public hearing during the Fairmont City Council meeting Monday.

If a franchise fee is imposed on the city’s natural gas customers, an estimated $280,000 could be raised annually, with the funds earmarked for road work.

“For a couple of years, the council has been exploring options for funding our street improvement program,” said Paul Hoye, city finance director. “Currently, we assess property owners for improvements and issue bonds to pay for those improvements. We’re looking for alternative ways to get away from issuing bonds and assessing property owners.”

The plan involves Minnesota Energy, the city’s natural gas provider, adding a flat $2.50 monthly fee plus a cost of .015 cents per therm on each Fairmont customer’s bill. Minnesota Energy would collect the fee and then turn those funds over to the city.

The average residential customer was see an increased annual cost of $40 to $50, Hoye said.

“At this point, are we looking at reducing assessments?” asked Councilman Bruce Peters.

“Currently we generate more in assessments than $280,000 so without an additional funding source, we would need to continue to with assessments,” Hoye said. “The other thing the city was looking at was increasing the amount of funding that we were generating for street improvements, being able to do more streets each year.”

He did not anticipate any change in the assessment policy unless an another funding source is found in addition to the franchise fee.

One proposal the council previously discussed was the creation of an additional half-cent sales tax, to be added to the current half-cent local option sales tax for a community center, but that plan was tabled when the Legislature, which must approve such a measure, put a moratorium on those tax plans. The council also had discussed the possibility of increasing the infrastructure fee on the public utility bills.

Council members encouraged Hoye to continue researching ways to raise additional funds so the assessment policy on property owners eventually could be reduced or even eliminated.

“With just one fee, we’re not there yet,” Randy Lubenow said. “We’re fairly far behind in our road needs so I don’t think we would cut fees. It seems like we need the additional revenue anyway. If we could get the sales tax and the infrastructure charge, then I think we could get rid of the assessments.”

No residents attended the public hearing or called in with any comments.

The council will vote on the franchise fee at its meeting on Aug. 10.

In another financial matter, Hoye updated the council on the city’s semi-annual investment report of the funds invested with different brokers and banks. The year began with $28.4 million invested and now sits at $24.2 million. Rates are at a historic low, making it difficult to find good competitive rates, so some funds have been moved to an insured account at a local bank where “we’re getting about as good a rate as we can.”

The portfolio earned about $238,000 in interest during the first six months of the year, which was down slightly from the same period in 2019.

During staff reports, Troy Nemmers, city engineer/public works director, told the council that a policy for users of the yard waste recycling site, otherwise known as the tree dump, should be available for review at the council’s next meeting. The policy, intended to reduce abuse of the facility, includes a permit process for commercial tree businesses.

Cathy Reynolds, city administrator, shared positive news about building permits.

“Our building permits continue to exceed where we were in 2019. Our year-to-date is at 86, and year-to-date in 2019 was at 55. We continue to be strong on the building permit side so things are happening in this town. That’s a good thing,” she said.

At the end of the meeting, Ruth Cyphers announced she intends to file her candidacy to retain her Ward 2 council seat, but Mayor Debbie Foster curtailed the announcement.

“This is probably not the appropriate time to say that,” Foster said.

When Tom Hawkins questioned Foster’s stance, she said she wasn’t aware of any council member ever announcing their candidacy during a public council meeting before.

“I’ll just say that I won’t say I was going to make the same announcement then,” said Hawkins, whose at-large seat also is on the ballot this year.

“Not everybody has an opportunity to say that live on TV,” Foster said. “The community members don’t have an opportunity to say that, and council members should never take advantage of time that they have at a board meeting that is official business to campaign. In my opinion, it’s just unacceptable. If everyone was given an opportunity to do that, it would be different, but not everybody is.”

Cyphers apologized, saying she was unaware of the protocol.

Hawkins said he would not apologize at the time but agreed to do so later if Foster could “find it is not normal to do that.”

In an email announcement earlier in the day, Councilman Wayne Hasek of Ward 4 said he plans to file for re-election today. His is the third and final council seat on the ballot this fall.

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