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City mulls fund options

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City mulls fund options
Worthington Minnesota 300 11th Street / P.O. Box 639 56187

WORTHINGTON -- With more than $9.5 million in undesignated money remaining in the legacy fund established with the 2008 sale of Worthington Regional Hospital, the Worthington City Council met in special session Wednesday morning to re-evaluate how the money has been earmarked and to consider charting a course for what remains.

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The hospital sale generated $26.6 million for the city, with the council setting up reserve "buckets" early on for capital projects such as the YMCA, a community center and fire hall; capital equipment; technology to include the city's share of the ARMER (Allied Radio Matrix Emergency Response) system; housing development and downtown redevelopment; economic development that includes airport improvements and development of the city's industrial park; and community development, to encompass parks and recreation and the Clean Water Partnership.

Alderman Lyle Ten Haken clarified that more than $9.5 million remains of the legacy funds. A total of $4.5 million in impact funds is also unspent, although those dollars have been targeted for specific projects.

"(The public) hasn't seen the fruits of the $4.5 million yet," Ten Haken said.

"We've made a commitment to it that we can't back out of," Alderman Ron Wood reminded the council.

Wood, who has long encouraged the council to set some of the money aside as an endowment, of sorts, said that now is the time to do just that.

"We're reaching the point where there isn't going to be a legacy left behind to draw on in the future," Wood said. "It doesn't take very long ... before you run off half a million dollars. We still have not reached a point where we've set money aside and draw interest."

Alderman Mike Woll said some of the money was spent to pay for land acquisition, which he deemed as spending one asset for another. A million dollars in hospital proceeds, for example, paid off a balance on land in the industrial park.

Another portion was spent on a new airport hangar, tennis courts and the new fire hall now under construction at the former Campbell Soup Co. site.

When the so-called legacy dollars were earmarked, they were meant to invest back in the community, City administrator Craig Clark said Wednesday that the money has done just that.

But with interest rates bringing in little to no money on the remaining balance, the fund has dwindled more than some council members wanted.

"We need to stop and lock in this money that we're not going to spend," said Alderman Mike Kuhle. "I'd rather bond for some of these projects coming down the road that continue to pull from (legacy dollars)."

Still, there has been a request on the table for nearly a year. The local Clean Water Partnership joint powers board asked last March that $2 million of the hospital proceeds be dedicated for water quality improvement projects in the Okabena-Ocheda Watershed District.

At that time, CWP members said they could use the interest earned on the $2 million to fund some larger projects, such as wetland restorations, dam modifications or replacement or fish barriers. They also said having the money earmarked could help them leverage for cost-share dollars from other programs.

Bringing the topic back for discussion on Wednesday, Mayor Alan Oberloh, who sits on the CWP joint powers board, said the $2 million request was a "large enough amount that it should generate enough interest to do something.

"Their claim is they can't bring any projects forward to council because they don't know that we have the money for it," Oberloh added. "I think their fear is that if this council turns over ... without having it there, that money could disappear."

"We haven't thrown a wet blanket on watershed projects in the past," responded Ten Haken. "I don't know why they're so skittish of us."

Each year, the city contributes some money into a Clean Water Partnership fund. City Finance Director Brian Kolander reported during the meeting that the fund is now at $235,000. The 2011 contribution will be $138,000, and the 2012 allocation is estimated to be another $87,000. That money is built into the city's levy and earmarked for lake improvements.

The watershed district has accessed less than $10,000 a year from the CWP fund in each of the past four years, Kolander said, adding that it has been used by the watershed primarily for insurance and some annual costs.

If the council set aside $1.5 million of hospital proceeds for water quality, Ten Haken estimated it could potentially earn $45,000 to $50,000 a year in interest.

Oberloh reminded the council that the dam on Lake Okabena will need to be replaced. Wood replied such a project could be bonded.

On the other hand, if the OOWD had designated legacy dollars, Oberloh said the council would still have the final say on how the money was used.

"They're asking for a designated fund, no different from what we have now," he said.

Ten Haken then suggested they refrain from designating a specific fund for the watershed district. If the OOWD wants to do a larger project and needs the funds, Oberloh said its board members need to realize they shouldn't be "afraid to come forward with projects."

"Every time they've come and asked us to partner on a project, we've always been there," Oberloh said. "We haven't turned them down yet on a piece of property."

There will likely be more discussion on the hospital proceeds in the coming months as construction continues on the fire hall. Kolander said the city needs to have about $4.5 million in cash on hand for construction, and there's currently $500,000 earmarked in the fire hall fund. He said the council will need to decide if they want to bond for the project or pay cash.

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Julie Buntjer
Julie Buntjer joined the Daily Globe newsroom in December 2003, after working more than nine years for weekly newspapers. A native of Worthington and graduate of Worthington High School, then-Worthington Community College and South Dakota State University, she has a bachelor's degree in agriculture journalism. At the Daily Globe, Julie covers the agricultural beat, as well as Nobles County government, watersheds, community news and feature stories. In her spare time, she enjoys needlework (cross-stitch and hardanger embroidery), reading, travel, fishing and spending time with family. Find more of her stories of farm life, family and various other tidbits at www.farmbleat.areavoices.com.
(507) 376-7330
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