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City gives tentative OK to library vote, borrowing

The Hudson City Council on Sept. 2 approved the first readings of four resolutions related to the proposed move of the Hudson Area Joint Library into the Nuclear Management Co. building on First Street.

On voice votes with no objections, the council gave preliminary approval to:

  • Borrowing up to $1.5 million to partially finance the purchase and remodeling of the NMC building;
  • Placing a notice in the Hudson Star-Observer, the city's official newspaper, telling the public about the plan to raise the money by issuing general obligation bonds;
  • Exceeding the state tax levy limit on an ongoing basis to cover library costs;
  • Holding a referendum election on the questions of whether the city should: 1) issue bonds to fund the library project, and 2) exceed the state tax levy limit on an ongoing basis to pay the city's portion of the library operational costs.

    Alderperson Lori Bernard was absent from the meeting and didn't participate in the voting. Council President Randy Morrissette II and alderpersons Scot O'Malley, Lee Wyland, Alan Burchill and Pam Brokaw were present, along with Mayor Dean Knudson.

    The mayor votes only if there is a tie between council members.

    Mayor's update

    Knudson gave the council an update on the major capital project proposal that he and the top officials in the village of North Hudson and towns of Hudson and St. Joseph are working on. The three municipalities are partners with the city in the joint library.

    Village President Larry Larsen and town chairs Jeff Johnson (Hudson) and Theresa Johnson (St. Joseph) agreed with him that the municipalities shouldn't fund more than half of the cost of the project, or a maximum of $5 million, Knudson said.

    The Hudson Area Library Foundation has estimated that it would cost $9.5 million to acquire the NMC building, convert it to a library and equip it. The foundation, chartered to raise funds for capital improvements for the library, is promoting the move to the NMC building.

    Knudson said the municipal leaders also agreed that the foundation needed to raise $4 million in donations and "qualified commitments" of donations before any public dollars are spent.

    Public funds would be matched dollar-for-dollar with the private money once the $4 million commitment is reached, he said. The foundation would have to reach an agreement on purchasing -- or an option to purchase -- the building from owner Xcel Energy by Sept. 20, 2009.

    Knudson reported that he had disagreed with the Library Foundation and the other municipal leaders on setting a Dec. 31, 2009, deadline for raising $4 million in private funds.

    He had recommended a Sept. 20, 2009, deadline, saying the city would need to know by then if the project was moving ahead in order to make decisions about the 2010 city budget.

    After some discussion, the council approved a motion by O'Malley instructing Knudson to ask for a Nov. 13, 2009, fund-raising deadline.

    O'Malley said the council typically approves the city budget for the next year during the second week of November.

    Extending the fund-raising deadline to the same week might allow the Library Foundation to receive more pledges from charitable foundations, he said. And at the same time, the council would have the information it needs to finalize the 2010 budget.

    Public safety needs

    Knudson raised the possibility of the city also holding a referendum next year on building a new public safety facility. He said that would add to the complexity of telling city residents about their tax rate options for 2010.

    The City Council is awaiting proposals from consulting firms offering to study the facility needs of the police and fire departments and St. Croix Emergency Medical Services.

    An ad hoc committee headed by Alderperson Lee Wyland in June reported that each of the departments is in need of more room. The police department, with a need for twice as much room, is the most overcrowded in its current facilities, Wyland said.

    The City Council in July voted to advertise for a firm to verify the findings of the ad hoc committee. The firm also would give recommendations of the type of facility to build and estimates on its cost, if it finds there is a need for a new building.

    The council is expected to review the proposals from the consulting firms in the near future.

    Alderperson Morrissette said at last week's City Council meeting that he considers a new public safety building to be a more important priority than a new library.

    "This is one question. It doesn't have to be mucked up with another thing," O'Malley said in response to the issue of a new public safety building being raised.

    Wyland and Brokaw agreed with him. Wyland seconded O'Malley's motion for a Nov. 13, 2009, library fund-raising deadline. It carried on a voice vote with no opposition.

    Referendum questions

    The council also discussed the wording of the two library referendum questions that will appear on the Nov. 4 ballot.

    Wyland and O'Malley were concerned about the wording of the question on exceeding the levy limit.

    Wyland indicated that the use of a percentage figure suggested a bigger tax increase than would actually occur.

    "My tax bill isn't going up 13 percent," he said.

    The Library Foundation has estimated that the move to the NMC building would increase the tax bill for library services for the owner of a $300,000 house by $78 annually.

    In 2008, city residents paid $16 per $100,000 of assessed property value for library services. The rate would increase to $42 per $100,000 in 2009.

    The draft of the referendum question given to the Star-Observer had blanks where figures will later be inserted.

    It reads, "Under state law, the increase in the levy of the city of Hudson for the tax to be imposed for the next fiscal year, 2009, is limited to ___%, which results in a levy of $___. Shall the city of Hudson be allowed to exceed this limit and increase the levy on an ongoing basis by a total of $___ (or ___%)(which results in a levy of $___ for 2009) for the purpose of paying the city's portion of the costs associated with the operation of the proposed new Hudson Area Joint Library facility?"

    City Attorney Catherine Munkittrick said state law dictates the language that has to be used on referendum questions asking voters for permission to exceed the state levy limit.

    Cost estimates

    "My goal has been to be straight-forward with the public. We've got to have good numbers, and I think we have them," Mayor Knudson said regarding the estimates costs of acquiring, remodeling and operating the NMC building as a library.

    In mid-August, Knudson estimated that it would take $6.22 million to buy the building and convert it for library use (including installing an additional elevator).

    Furnishings and equipment, adding to the book and other materials collection and moving expenses would add another $1.83 million to the project cost, he estimated.

    Knudson also included $900,000 for contingencies, an $800,000 inflation allowance, $308,352 for construction financing and building carrying costs, $200,000 for capital campaign expenses and a $241,648 reimbursement to the city for the current book collection in his estimate of the project cost.

    With those expenses included, the total estimated project cost is $10.5 million.

    A higher levy limit

    In an Aug. 28 memo to council members, Knudson reported that the city will be allowed to increase its tax levy by up to 8.38 percent in 2009 without going to the voters for permission.

    The closure of Tax Increment District No. 4 will bring a 12 percent increase in the city's tax base and allow a 6.08 percent increase in the levy, Knudson said.

    He said the city can add another 2.3 percent to the levy because that is the amount that its tax base grew because of new construction.

    The mayor estimated the financial impact of moving the library to the NMC building at $360,000 annually, including both capital costs and operations.

    With the move adding about 7 percent to the city's tax levy, it could be done without going to referendum, he said. But staying under the levy limit would require budget cuts to other departments and the elimination of some projects.

    Knudson noted that the city will lose $60,000 a year in rent that the library is paying for use of the Hudson Municipal Building if it moves to the NMC building.

    It also will lose about $15,000 a year in property tax revenue if the NMC building becomes a library and is taken off the tax rolls.

    Quarles & Brady, the law firm that prepared the referendum questions for the city, has noted that the state levy limit law will expire on Nov. 30, 2009.

    "It is not possible to know with any certainty whether the levy limit legislation will be renewed, or in what form, or whether new legislation will seek to limit the city's levy in the future," attorney Jeffrey Peelen of Quarles & Brady wrote in an Aug. 28 e-mail to city Finance Officer Betty Caruso and other officials.

  • Randy Hanson

    Randy Hanson has reported for the Star-Observer since 1997. He came to Hudson after 11 years with the Inter-County Leader at Frederic, and eight years of teaching social studies. He’s a graduate of UW-Eau Claire.

    (715) 426-1066
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