Financial Concerns Fuel Heated Words At City Hall

A capacity crowd filled the Glenwood City Council Chambers Tuesday, March 10, as citizens sounded off about the findings of an audit report that revealed a deficit of nearly $300,000 in the city’s general fund balance for the fiscal year ending June 30, 2014, and shortcomings in the city’s day-to-day financial practices.

Several audience members also voiced objections to a 46-cent hike in the city’s property tax levy being considered to help replenish the general fund deficit, purchase vehicles for the public works department and cemetery and pay for unforeseen costs on the controversial Vine Street – Railroad Ave. construction projects.

Many of the “material weaknesses” and “significant deficiencies” identified in the audit report concerned the city’s financial reporting, documentation and cash reconciliation practices. Many of the issues were repeat findings identified in a previous city audit for the 2012-2013 fiscal year, giving the appearance the city is ignoring the recommendations of its own auditors.

One by one, Glenwood citizens stepped up before the city council to voice displeasure with the handling of their tax dollars. Comments were directed at city administrator Brian Kissel, mayor Kim Clark and members of the council.

“Based upon the findings of recent audits and other sources, the public trust has been betrayed,” Joanne Kohn said. “The failure of the city manager to provide an accurate and timely accounting of city funds, for which he was hired to oversee, calls into question the ability of the city of Glenwood to meet both current and future financial obligations.
    

“As elected officials, it is my hope that you will make the hard decisions necessary to correct the practices that brought the city to this sorry state of affairs and not simply say it’s the cost of doing business and ask the taxpayers to cover up for the mistakes that have been made.”

Darcy Butts was among the citizens advising city officials not to spend more money than they take in.

“I think the council needs to sit back and think about needs of the community, not necessarily the wants,” Butts said. “One of the wants I’m going to mention specifically is a want for a swimming pool. The voters voted it down, yet somebody thought they could override the will of the voters. I don’t know if it’s too late to put the halts to some of this extra spending, but this is what needs to be looked at.”

Dan McComb said the city has difficult financial decisions that must be made and suggested personnel changes may be in order at City Hall.

“You councilmen and mayor run this town, the city manager feeds you information so you can do your elected duties to run this town. We need to change our city manager. Our financial problems are reoccurring with no corrective action ever implemented or the ability to overcome our city’s financial problems,” McComb said. “We need to stop our spending now until we get our financial issues corrected. If any of the councilmen or the mayor feel these actions are incorrect, then you need to step down.”

Lynn Mintle compared the city’s financial practices to those taking place at the federal level.

“You cannot continue to do like Washington, except in Washington, they tax and then spend. You guys are spending and then taxing,” Mintle said. “It needs to get under control. Somebody needs to get out a really sharp pencil and go back through the line item budget and say, ‘this isn’t fair to the citizens of Glenwood. We are responsible. This happened on our watch. We need to make changes. We need to get this corrected. We need to do whatever is necessary to bring this city back into the black.’”

Mintle and others in the audience urged the council not to pass the tax levy increase to be included in the city’s 2015-16 fiscal year budget.

“We are asked as residents to entrust you with more money for a debt service levy. We need some accountability for the money you already had spent,” Mintle said.

Ryan Sell asked council members to do their own homework on the Vine Street – Railroad Avenue projects and not rely strictly on the information and advice they’re getting from Kissel, who Sell said is getting most of his information from Steve Perry, the city’s engineering consultant for the two roads projects. Sell suggested engineering consulting fees are a major factor in the city’s financial dilemma.

“What we continue to hear about is engineering fees. Just on this Vine Street project, you’re going to have a private company that you folks received all of your advice from that is going to receive $150,000 in engineering fees,” Sell said. “This process that we’ve been through, you folks have only been advised and got advice from mainly one person. That person, which may be Brian, gets his advice from the gentleman sitting over here who’s receiving $150,000 on the project.”

The Vine Street – Railroad Avenue projects have a projected price tag of $1.4 million with property owners on the two roads being assessed for about 12 percent of the costs and 80 percent of the work being paid with federal dollars given to the Iowa Department of Transportation and distributed through the Metropolitan Area Planning Agency (MAPA). The remaining funds would come from property tax dollars generated through the tax levy increase.

In regard to the 46-cent tax levy hike, the council meeting included a public hearing on the issuance of $220,000 in debt service levy general obligation bonds to replenish the general fund for monies spent on the replacement of the roof at the Glenwood Public Library and a separate public hearing on the issuance of $485,000 in debt service general obligation bonds to help finance the Vine Street – Railroad Avenue projects and the purchase of two trucks for public works and a back hoe for the cemetery.

The resolution council members were asked to approve, however, lumped all of the matters into one $700,000 loan obligation, which didn’t sit well with some members of the audience and council members who supported the replenishment of the general fund for the library roof, but are opposed or undecided about the Vine Street – Railroad Avenue projects.

After input was solicited from Mills County Auditor Carol Robertson, who was seated in the audience, and Susanne Gerlach, a consultant the city is using from Public Financial Management, Inc., the council was told it would have to vote on the resolution as presented because the city was required to certify its 2015-16 budget with the state of Iowa by March 15 in order to collect property taxes.

Council member Jessie Lundvall, who is opposed to funding the Vine Street – Railroad Avenue projects, said the wording of the resolution and its timing left council members with no choice but to vote for something they may not support.

“For a lack of a better term, this is B.S.,” Lundvall said.

To the disapproval of many members of the audience who suspected the issues were lumped together in one resolution to force city council approval, the resolution passed by a vote of 5-0.

Gerlach said lumping the projects together would save the city money, but did not elaborate. In an interview six days after the meeting, Kissel said the bonds were presented as one resolution at the advice of Bob Josten, the city’s bonding attorney, but Kissel was unclear of the legal rationale.

“One reason the bonds were lumped together was to save on issuance fees,” Kissel said. “Each time you do a separate bond, they charge you bond issuance fees. There’s different kinds of bonds, there’s a central corporate purpose, which are the equipment and Vine Street and Railroad Avenue bonds, and then there’s general corporate purpose, which is the library roof reimbursement. You have those two types. As to why Bob put those in one resolution, I would have to ask Bob, but I think he was just trying to simplify things.”

Kissel said the city does have the option of amending its budget should the decision be made not to proceed with the roads project or some other debt associated with the resolution that was passed. Kissel said a special meeting of the city council is likely for further discussion of the Vine Street – Railroad Avenue project, which appears to be up in the air at this time.

“Right now, we’re still waiting to hear back from the council,” Kissel said when asked of the status of the roads projects. “We need to fully inform the council of the circumstances if you say ‘no’ and these are the circumstances if you say ‘yes.’ They need to be clear, concise and laid out.”

Kissel made it clear he believes the city should move forward with completion of the projects, despite the opposition expressed at the council meeting.

“If they say no, then we lose out on the federal funding, potentially. It depends on whether MAPA wants to give that oney to another city or not,” Kissel said. “Then, they have to weigh the cost of added construction fees, the wait time and then the specs may change from IDOT in regard to the construction.”

Glenwood public works director Perry Cook said the city could resurface Vine Street itself at a cost of around $130,000, but because of the condition of the subgrade underneath, the new surface would last only three or four years.

The project being proposed calls for a stretch of Vine Street, from one-half block south of Sharp Street to Nuckolls Street to be milled before being resurfaced with concrete over a rock and sand base. Storm drains would be installed and concrete gutters, sidewalks and driveway approaches would be poured.

The street will be widened by about 18 inches on each side, increasing the width from 25 to 28 feet.
The reconstruction of Railroad Avenue would involve milling gravel and asphalt and resurfacing with concrete from just south of the Mills County Law Enforcement Center to the Glenwood Community School bus barn.

“We can get the project done completely right, the way it should be, and that road is probably good for another 25-30 years,” Kissel said. “The subgrade underneath that road (Vine Street) is completely shot. You can put a band aid on it, but it’s only going to last you three or four years before it’s done again.”