Based on the context provided for the City of Moose Lake, here is the transcribed town hall meeting with speaker identifications. [0:00] **Mayor Jim Michalski:** ...and I've done [0:07] **Mayor Jim Michalski:** I understand that a hundred [0:15] **Mayor Jim Michalski:** that was nice that way I remember those [Applause] you can malleable [0:35] **Mayor Jim Michalski:** you [0:45] [Music] [0:53] **Mayor Jim Michalski:** It is July 11th, 2018, and I'd like to start with the Pledge of Allegiance. Please place your hand over your heart. I pledge allegiance to the flag of the United States of America, and to the Republic for which it stands, one nation under God, indivisible, with liberty and justice for all. [1:18] **Mayor Jim Michalski:** The next item on the agenda is actually to approve the agenda. Are there any additions? [1:39] **Ellissa Owens (City Administrator):** Any other items? Old business for the liquor store, 5e, sure. [1:59] **Mayor Jim Michalski:** Do I hear a motion to approve the agenda? **Council Member Douglas Juntunen:** So moved. **Mayor Jim Michalski:** We have a motion, do we have a second? **Council Member Kris Huso:** Second. [2:20] **Mayor Jim Michalski:** Moving on to number two, the consent agenda. We have 2a1, the minutes for June 13, 2018. The minutes and financial reports are presented. Do we have a second? **Council Member Walter Lower III:** Second. **Mayor Jim Michalski:** All in favor say aye. (Group: Aye). Opposed? Motion carried. Under 2b, financial reports, we have number one. [2:50] **Ellissa Owens (City Administrator):** Even I have one I think you just approved, so if you have any questions, we'll answer the questions. If there's any that you'd like to pull, just make a new motion. [3:16] **Mayor Jim Michalski:** Hearing no questions from the council, we will move on then to the public comment, number three. [3:39] **Mayor Jim Michalski:** Is there anything from the public? Hearing none, then we'll move on to the 2017 City of Moose Lake audit financial statements presentation. [4:00] **Auditor (Tim):** We're here to wrap up the 2017 audit. And as in previous years, instead of going through the really thick bound book... yeah, if I could hop in on as well, but he'll be going through the PowerPoint history. Your Honor, our team consisted of myself and Josh... in years past we had a manager, his name was Mike Olsen, and he chose a new path with a great opportunity, so we were able to replace him with actually a very experienced crew where we have over 46 years of government accounting and auditing experience. The work done for your audit follows auto standards that drive the testing we do and the reporting we do. [5:08] **Auditor (Tim):** One of the reporting things that we need to do is communicate with you. You should have a letter; it's about four pages long. I think I've told you in the past it's boilerplate. I'm just going to touch on a couple key things. One, we got to issue an opinion on your financial statements, and we issued what's called an unmodified opinion, which means no disagreements with management as we performed the audit. For the council and mayor, I just want to bring to your attention that the staff really had everything ready for us. That doesn't always happen in our audits, and that just makes the audit go smoothly. So thank you to everybody for their cooperation. [6:25] **Auditor (Tim):** Regarding internal controls, we are required to communicate to you regarding segregation of duties. That's been around for a few years; with a city your size, this is very, very common. Regarding your accounting procedures, the city has lots and lots of transactions that flow through your general ledger, and we had just a couple adjustments for accruals and some reclassifications to make sure the revenues get in the right bucket on the external financial statements, but truly not very many at all. [7:11] **Auditor (Tim):** The third item is financial statement preparation. City staff enter all your transactions into the general ledger, but when it comes to putting the bound book together, that process requires software that works really well, and we're just required to communicate that item. Regarding state statutes, I am happy to report that after we did all our testing for cash investments, contracting, disbursements, and debt, there are no written findings to be reported there either. That is good news. [8:12] **Auditor (Tim):** Any questions so far? Your total net worth difference between assets and liabilities in your financial statements is about $18.3 million, and 37 percent of that is used for city purposes; the other parts are either restricted by state statutes or grant agreements. [9:14] **Auditor (Tim):** Overall you can see it's been trending upwards, so I think that reflects a pretty strong financial position for the city. On page nine, we look at the general fund. For the year, its fund balance decreased about $51,000—it went from just under $1.4 million to about $1.33 million in 2017. Within that position, there's different categories. "Unassigned" means you have funds available to cover operating costs. For the year, that unassigned bucket of funds decreased about $72,000. [10:15] **Auditor (Tim):** Decreases could be a little alarming, but a key measurement is how many months of expenditures do you have built up in reserves? A good target is no less than five months. I mention this each year; it is a really good target. The city's general fund is sitting at seven months, so it's above that amount. Overall pretty strong, but it did drop about one and a half months from the prior year. [11:20] **Auditor (Tim):** On slide 10, we take a look at all of the city's governmental funds. Where's the city getting their money from? Just like most every city, the two primary sources are tax revenues and IGR (intergovernmental). All your governmental funds saw an increase in revenues of about $191,000. [12:15] **Auditor (Tim):** Expenditures actually increased about—and I apologize for this little typo—I think they actually increased about $479,000 for the year, and the biggest area was in capital outlay which increased about $420,000. In slide 12, the city's governmental funds have some debt. Moose Lake issued $409,000 of new Street bonds, but the debt only went up $139,000 total because you paid off $170,000 of your old bonds. [13:33] **Auditor (Tim):** Regarding the enterprise funds, I can tell you pretty quickly how these have been doing. The green bars are revenues, the red bars are expenses. Cash flows from operations actually increased for the year by about $16,000. So just operationally, it was showing overall profit. Next slide looks at the liquor store gross profit percentage; it increased by a half a percent in 2017. [14:55] **Auditor (Tim):** The overall statewide average is a little over 41 percent. Overall, the liquor store is trending in the right direction. The next slide, we look at the water fund. Its revenues were down about $21,000 for the year, but its expenses were down $57,000. If you match that up to your own personal finances, if your expenses went down more than your revenues went down, that still helps you financially. [16:20] **Auditor (Tim):** In general, all funds are resulting in a positive hit to the bottom line. Even if revenues were down, expenses in general had gone down right with them. I think the last one is the electric fund; its operating revenues were up about $97,000. [17:35] **Auditor (Tim):** To summarize, the fund balance is strong in the general fund even though there was a loss in the current year. You were over budget in expenditures because you had those unbudgeted capital outlay expenditures that were needed and the council approved them. Revenues were over budget by about $343,000 due to intergovernmental revenues. The liquor store again posted a profit. Truly, I think the city gets a thumbs-up for 2017 as far as financial operations go. I'll open it up for questions. [18:35] **Mayor Jim Michalski:** Regarding the $400,000 difference you mentioned in the beginning, I see that later in the sewer fund? [18:44] **Auditor (Tim):** Yeah, in the sewer fund, it's just the lift station project. [18:49] **Ellissa Owens (City Administrator):** Yep, so we have the $51,000 in overall loss and the $577,000 over budget in expenditures. That covers the arena, Highway 73, 3rd, and Kenwood. When you look at $343,000 over budget for revenue, $225,000 of that is the arena. For the $577,000 over budget for expenditures, $250,000 of that is for the arena. We also covered 25% of all expenditures for the flood. Highway 73 was supposed to be free, but the initial payment we sent was $80,000. I wanted to put that out to the community so they know why we didn't budget for some of those. [20:25] **Mayor Jim Michalski:** And for the arena, that was matching funds for a Mighty Ducks grant? [20:30] **Ellissa Owens (City Administrator):** Yeah, so in that case, for a $250,000 project, it's over budget both ways, but it only really cost us $25,000 for a $250,000 project. [20:55] **Council Member Lou Ohly:** I want to make sure about the Deputy Registrar revenue. After we got the new DVS system (MNLARS), we started losing money within the program. They have not solved it yet and I don't think they know how to solve it. [21:27] **Mayor Jim Michalski:** That's affecting every motor vehicle office in the state, unfortunately. Ryan, do you want to mention anything on that? [21:38] **Ryan McKeon (Finance Director):** Yeah, I mean the big thing with the DMV is that we don't own the system. So, thank you. [21:55] **Ellissa Owens (City Administrator):** I guess to add on to that, one of the big changes is that Katie did a lot more of the audit work this year and did a very, very good job. The whole thing went smooth from my standpoint. [22:15] **Auditor (Tim):** My audit team loves working with everybody here, and it's because not too often we get to pop in and do the audit and everything's there. [22:25] **Council Member Douglas Juntunen:** One question for Tim. Which page are you on? Page six? I just emailed you guys the whole packet because you can't actually read these slides. Tim, can I see yours? I want to see what the scale is. [23:02] **Auditor (Tim):** The scale for this one... if you looked at sewer, I bet the scale on the left side is bigger. This one is between $200,000 and $250,000. In 2013, that one is probably maybe $50,000 total difference. 2016 is kind of the outlier. [24:13] **Mayor Jim Michalski:** Did the 2016 flood have anything to do with this calculation? I don't know if we used more water because we flooded. [24:30] **Auditor (Tim):** Let's just say in 2016 it was $280,000 in revenue and 2017 was $260,000. The scale is pretty small on that, so it's not as big a jump as it seems. [25:05] **Council Member Walter Lower III:** We would have sold more water for building the school. [25:15] **Council Member Lou Ohly:** But I don't know that we would have sold more water because the school doesn't always concern us with the larger liters. When did the hospital expansion take place? [25:35] **Ellissa Owens (City Administrator):** That was in that period. Mercy Hospital expansion could be it. [25:53] **Mayor Jim Michalski:** Moving on to number four, Department Reports. Law Enforcement? [26:09] **Kelly Lake (Sheriff):** This has been a month with different criminal activities that we've had to designate a lot of time to work on. We had a couple of pretty in-depth investigations. We did some search warrants getting methamphetamine out of a vehicle. For the City Parade, we are making plans for National Night Out with the whole community—cook up hot dogs and hamburgers and have games and prizes. It's a great partnership the department has with our citizens. [27:15] **Kelly Lake (Sheriff):** We've done several interviews this last month where it would have been really nice to have a designated interview room with video and audio. Privacy is a big thing. It's just a very, very busy time because Moose Lake is just an extremely busy town, especially in the summer. [28:11] **Mayor Jim Michalski:** I have just a couple things. One of the things mentioned in the report is the number of hours spent up at the DOC (Department of Corrections). There's an awful lot of overtime. I'm sure that this has come up a million times; something has got to change with the prisons and MSOP not paying for this kind of work. I mean, 90 hours spent up at the DOC? As our department, can we send them a bill? [29:44] **Kelly Lake (Sheriff):** Quite a few years ago we went into negotiations on this very issue, and all it resulted in was the money being allocated to the county attorneys, but we have not seen it. [30:31] **Mayor Jim Michalski:** I would support sending them a bill and seeing what they say. Every month the department is very busy, they have been doing an excellent job. [31:16] **Mayor Jim Michalski:** You want to talk about the window in the squad just in case a bill comes through on that? [31:22] **Kelly Lake (Sheriff):** Sure. We got a call of a mentally unstable individual who was transported to Mercy Hospital. He ripped his IVs out and left the hospital, was in traffic swearing at people. He was arrested for disorderly conduct. He began to fight and assaulted one of the officers; $1,400 damage to the squad. We obviously are sending up charges. Again, we're just dealing with a lot of very difficult people. Job gets harder and harder every day. [32:38] **Council Member Kris Huso:** Two hundred and twenty-three calls is a lot. The second thing is discussion with our officers and our on-call. Can we go—is it 14 hours a week? [32:45] **Ellissa Owens (City Administrator):** I can't believe I forgot this, considering it's not 14 a week. I think it's 14 per pay period. [33:10] **Council Member Kris Huso:** Is that working for you? [33:24] **Kelly Lake (Sheriff):** We make sure they get the time off, even if I have to work it myself, which I have for several shifts. Honestly, in the summertime, I could 100% justify a full-time investigator just to follow up on these calls. [34:01] **Mayor Jim Michalski:** I think we have a good reputation and you get results. Public Works report? [34:35] **Phil Entner (City Superintendent):** Mr. Mayor, members of the Council. We as well had a very busy month of June. The heavy rains of June 16th to the 18th really created a lot of work for us. Multiple streets were scraped from debris, gravel, and rocks washed from the heavier rains. We cleaned off approximately a thousand lineal feet of ditching just to clean everything back up from sediment and silt. [35:50] **Phil Entner (City Superintendent):** Everything is patched up and safe; everything is back open. I don't have the final numbers off the top of my head, but I think we were somewhere around $30,000 to $40,000 worth of damage for my department. Culverts were junk and ended up washing sections of streets away, very similar to what happened in 2016. [36:36] **Phil Entner (City Superintendent):** The water department distributed drinking water and the water tower was inspected. We collected 21.5 million gallons of wastewater. If you look from last month, that is up quite a bit. [37:17] **Phil Entner (City Superintendent):** Tim and I have worked through this, and we now will be sending out the first bill to the prison next month. Everything is pretty much on the up and up. Regarding equipment, not a single call about plugging up or backing up. It's been very, very good. [38:13] **Mayor Jim Michalski:** Make sure you pass it on to your crew. Phil, did the equipment for the liquor store get installed? [38:40] **Phil Entner (City Superintendent):** The printer is working. We are trying to figure out some connectivity issues down there. We have fiber run to the campground now and that will be coming on soon, then we can work on the Wi-Fi down at the campground as well. [39:51] **Ellissa Owens (City Administrator):** Regarding the City Engineer's report, they updated some of the maps. Phil had gone through all of the city policies and standard details for streets and utilities. We did talk about a grading and land disturbance permit that came in. There was a parking lot that was dug up. [41:10] **Ellissa Owens (City Administrator):** Before we even get to the budget meeting, where some of you tell me that we're not doing another budget without a road, this is one of the things I would like to bring up. The sewer line had to have somebody else clean it for the first time; we took out a 40-foot root ball out of it. We need to talk about I&I (Inflow and Infiltration) issues. This is one of the projects—it's not fun, it's in a gravel alley, so it's not like we're even getting a road out of the deal—but this is a project we need to look at for next year. [42:21] **Council Member Douglas Juntunen:** Is it Duncan or Mike's road? We need to be ready because some have really deteriorated more than others, especially First Street. [42:35] **Ellissa Owens (City Administrator):** Last time the priority list came out, Phil went through it with the engineers. [42:47] **Ellissa Owens (City Administrator):** And not to take you guys off the hook completely, but honestly, I think the combination of those three—I know roads get bumpy, but we have a lot of really old water and sewer lines as well. Some of the roadwork needs to be based on that stuff as well. [43:20] **Mayor Jim Michalski:** I agree, I drive First Street every day and it's getting worse. [43:39] **Council Member Walter Lower III:** I'm all for it. We've signed down to the Arrowhead. And the other addition is storm sewer; that wasn't an issue fifteen years ago, but now it is. That's more expense. [44:26] **Council Member Douglas Juntunen:** We need to look at prioritizing and update that committee. [44:48] **Ellissa Owens (City Administrator):** We can bring that up at the next meeting. It doesn't do us any good to rip them up if there's stuff underneath that needs to be done at the same time. We need a five-year plan. [45:15] **Mayor Jim Michalski:** Just one quick question with that drainage we did on Second Street—it evidently worked because I didn't see any standing water with that modern rain. Moving on, Chamber of Commerce updates? [45:59] **Chamber Representative:** Our junior ambassadors, Danny Whitehead and Danny Lilia, have been working in the office helping out with the parade. We have Agate Days coming up this weekend. The Gem and Mineral Show is going to be held at the arena instead of at the old school. The steak fry at the fire hall is Saturday starting at four o'clock. Sunday is the triathlon, and August 10th is the "Nine and Dine" golf outing. We are not going to have a Corn Day this year; it's just a lot of work and the Chamber Board decided it's too much work for what they get from it. [48:00] **Mayor Jim Michalski:** Moving on to number five, previous business. 5a? [48:15] **Ellissa Owens (City Administrator):** Funding for road and utility improvements. No real comments to bring back regarding MSOP and DOC. [48:37] **Mayor Jim Michalski:** 5b, Animal Control. Resolution 18-07-01 supporting the City of Cloquet animal facility. [48:55] **Ellissa Owens (City Administrator):** Cloquet has decided to put in place a ten-kennel act. Friends of Animals in Carlton County is closing. The reason we were looking at those increases was for those reasons. Cloquet themselves have not actually accepted yet. We would need to take a look at whether or not we want to try to do it by ourselves or take them up there. [50:15] **Council Member Kris Huso:** Is Duluth an option? [50:20] **Ellissa Owens (City Administrator):** Animal Allies in the past has said they don't really want to step into Carlton County because there was a shelter here, but since Friends of Animals is closing, they might be interested. [51:22] **Ellissa Owens (City Administrator):** The town clerk emailed me today and said they didn't get more dates yet. We'll have to send out new ones. [51:42] **Mayor Jim Michalski:** Regarding striping parking spots and changing to one-way on the Avenue, there's two quotes. We had a Facebook survey and 886 people voted. [52:15] **Council Member Lou Ohly:** I know several people that voted more than once. [52:26] **Mayor Jim Michalski:** People want to leave it the way it is. You have to remember, anybody over 65 years old did not get on Facebook. [52:54] **Council Member Douglas Juntunen:** But 886 votes is a lot. My point is that it's not overwhelming to leave it. [53:26] **Mayor Jim Michalski:** There was a concern about turning from the left lane. We would have to change the parking to the east side of the road. I think we should probably leave it be. There's two estimates for striping parking spots in the downtown in your packet. [54:59] **Council Member Douglas Juntunen:** Phil, why'd you get two quotes? **Phil Entner (City Superintendent):** They are different companies. Kaminsky Sealcoat is the cheaper of the two. **Council Member Douglas Juntunen:** I'll make a motion we go with Kaminsky Sealcoat and Striping. **Mayor Jim Michalski:** Thank you. I just want to make sure it's getting done. [55:47] **Council Member Walter Lower III:** We have another major wire issue. Could you look into that and see why the sign isn't there? It should have been there for last year. [56:06] **Mayor Jim Michalski:** Okay, moving on to new business, 6a. Resolution 18-07-02, electric utility bond. Jim, you want to bring that up? [56:24] **Jim Pederson (Power Superintendent):** This is for funds for us expanding at the power plant and putting in the new generator. It's a way to defer some of the cost by borrowing. It is a five-year bond. [57:15] **Mayor Jim Michalski:** That's what we did with our last bond. I think this is better than trying to pay it all now. [58:06] **Council Member Lou Ohly:** I'll second the motion to pass Resolution 18-07-02. [58:39] **Mayor Jim Michalski:** Any further questions on the council? [58:52] **Mayor Jim Michalski:** New business, Moose Lake WWTF capacity. [59:06] **Phil Entner (City Superintendent):** I'm up here to talk about BODs (Biochemical Oxygen Demand). The capacity currently being used is at 87 percent. The state starts to harp on it at 85 percent. We have about 16 months of data since we replaced that pipe in the river. Of the remaining capacity, we could add basically 263 households before we are at 100 percent. [1:00:41] **Mayor Jim Michalski:** I just want to know moving forward, what is our five-year plan for the treatment ponds? Are we looking at an expansion? [1:01:28] **Phil Entner (City Superintendent):** We have enough room at the ponds to add additional ponds. At some point in the future, we are probably going to need to do that. One of the biggest factors is the I&I problem. If a hotel goes in, that's a ton of capacity added into your sewer system. [1:02:45] **Council Member Lou Ohly:** Does it have anything to do with Windermere Township? [1:02:50] **Mayor Jim Michalski:** Absolutely, their expansion affects our system. [1:03:03] **Council Member Walter Lower III:** In that 2010 project, the second part was to do the three ponds, which we cancelled after the state pulled out. The MPCA told us then they would have approved three ponds but no more. I don't know if they would ever approve ponds again because of our system size now. [1:04:35] **Phil Entner (City Superintendent):** There are two projects that are quick hitters. We have a 10-inch pipe that has been laying there for five years unused. We are still using the old 1932 clay pipe through the swamp. We need to switch into that new pipe and abandon the old clay pipe. [1:05:48] **Mayor Jim Michalski:** I'd like to get the powers that be to sit down and address this. It takes time because their budget is a year away. [1:06:40] **Phil Entner (City Superintendent):** One other thing too: sludge levels in the ponds. We might have more storage by cleaning our ponds, but that is very expensive as well. [1:07:22] **Mayor Jim Michalski:** I'd rather have a lot of different options to work on. It shows the state we are being proactive. Number 6c? [1:08:08] **Ellissa Owens (City Administrator):** This is the change order for that stretch of the road. It's $215,000. [1:08:53] **Council Member Lou Ohly:** I'll make a motion to approve the final pay request. **Council Member Douglas Juntunen:** Second. **Mayor Jim Michalski:** All in favor say aye. (Group: Aye). [1:09:12] **Ellissa Owens (City Administrator):** Regarding the LMC (League of Minnesota Cities), we met with representatives from Cloquet, Two Harbors, Carlton, and Scanlon. We need more lobbying for small cities' funding for road and utility improvements. Cities like Hermantown or Cloquet get more funding because they are over 5,000 people. When we have smaller floods like the 2016 one, we are on the hook for 25%, which was about $200,000. [1:11:59] **Mayor Jim Michalski:** Regarding 3rd Street, as Phil talked about, it washed out again. I had a property owner come in and basically beg to have 3rd Street paved. We have four streets that are still dirt within the city. [1:12:55] **Phil Entner (City Superintendent):** We're up to sixteen of dirt if you count Southtown and Chair. [1:13:42] **Ellissa Owens (City Administrator):** I don't know that we're going to have a road budgeted for next year because we don't have engineering specs for any road yet. I'm probably going to take our sales tax and budget that towards a road project line-item. [1:14:51] **Mayor Jim Michalski:** I'm in favor of doing our groundwork first. [1:15:27] **Council Member Walter Lower III:** The problem is when it washes out, people can't exit their driveways with their vehicles. If we at least look at the roadbed instead of blacktop, it would be more solid. [1:16:25] **Mayor Jim Michalski:** 141 Knollwood water request. The new property owner, Shannon Boylan, is requesting water. [1:16:58] **Ellissa Owens (City Administrator):** We discussed this already. The assessments were going to be too expensive, so he said he would do a well, but a well doesn't really work there. Now they are requesting water again and asking if the city would pay for it. [1:17:44] **Mayor Jim Michalski:** Everyone on the street would have to be assessed for it. I feel terrible that we didn't move with it back then. [1:18:06] **Council Member Kris Huso:** We had a homeowner state he did not want to pay the $6,000 assessment; he wanted the city residents to pay for it. At the time, the total bill was going to be about $186,000 and we made the correct decision for the taxpayers. [1:18:39] **Ellissa Owens (City Administrator):** Now he sold it to somebody else, and the cycle is starting again. If you guys want, I can contact those seven people again and see if they are willing to pay for the assessment. [1:20:12] **Council Member Douglas Juntunen:** My opinion is to send it back to the homeowner and say that if you have seven neighbors who want to come forth and are willing to pay for it, here is the price. [1:20:57] **Ellissa Owens (City Administrator):** I think we agreed to only three people at the end; the others didn't want it. [1:22:25] **Mayor Jim Michalski:** We need consensus. If seven people are willing to pay for a majority of the work, then we can go forward. [1:23:33] **Mayor Jim Michalski:** Under 6g, performance review? Let's skip that and do the rest. Agate Days freezer? [1:24:00] **Council Member Lou Ohly:** I'll make a motion we purchase the freezer for $1,603 from Dougherty Appliances. **Council Member Kris Huso:** Second. [1:24:28] **Mayor Jim Michalski:** We will do the closed session at the end. Moving on to number seven, reports of correspondence. [1:24:45] **Ellissa Owens (City Administrator):** Data request from "Open the Books." I sent it to our attorney. They are requesting payroll info for lifeguards and things like that. It is a legal request, but I can't charge for my time to pull it together. [1:26:00] **Mayor Jim Michalski:** Number eight, committee and board meeting minutes. Power, EDA, and HRA. [1:26:39] **Mayor Jim Michalski:** Upcoming meetings: City Council Wednesday August 8th at 4 p.m. EDA August 8th at 12 p.m. HRA August 13th. Fire District August 14th. Library Board August 13th. Technology Committee August 2nd. [1:27:55] **Council Member Walter Lower III:** Mayor, could I add one more? The Cemetery Board.