At the Clintonville City Council meeting Tuesday, April 14, Interim City Administrator Chuck Kell updated the council about the unfunded pension liability the city has.
Kell said the city first joined the Wisconsin Retirement Program on Jan. 1, 1964.
He said the first report of what the city owed toward the unfunded liability program came out in 1988.
“That was the first year, and they reported it I believe ever since then,” Kell said. “In that particular year the liability was $485,000.”
He said that is what the payment would have been if the city would have decided to take care of the liability in 1988.
Kell provided the council with a breakdown of how the current $1.1 million liability is split between the city departments.
He said cash reserves in the electric utility and water utility looked to be sufficient enough that the city consider paying cash to pay those amounts. The electric utility portion of the unfunded liability is $225,743, while the water portion is $81,596.
He said about $300,000 of the unfunded liability could be paid for with cash, with the remaining amount having to be borrowed to pay off the entire liability.
Kell also shared with the council several emails from Todd Taves of Ehlers, the city’s financial advisor.
“He had alerted the city to this issue back in January 2014, expressing some concerns when the city was going for its general obligation debt in 2014, that this unfunded liability could have been raised by the bond holders as a potential issue,” Kell said.
Kell said Taves had suggested at that time that the city pay off the unfunded liability using the Wisconsin State Trust Fund.
“Apparently that issue was not brought forward to the council, that I can find, so it wasn’t addressed,” Kell said.
Taves informed Kell via an email that for an additional $13,000-$15,000 per year over what the city is currently paying into the state, the debt would be paid off in 20 years.
“I think the good thing about this is that in my mind $13,000-$15,000 additional dollars per year should be manageable,” Kell said. “And if it’s done through a debt payment it’s not going to hurt your levy limits and that type of thing because the debt isn’t subject to levy limits.”
He added that if the debt is lowered by using cash reserves, the debt payment each year would be less.
Kell suggested that Taves meet with the Finance Committee in the next 60 days to discuss all the expenses the city is going to be facing.
A discussion ensued about why the city didn’t address the issue sooner.
“You cannot blame your auditors for this issue,” Kell said.
Kell said he met with the auditors and their attorney, and they are upset about the “bad press” they are receiving regarding the issue.
“We looked back in the records and the city has not asked the auditors to appear before this council in over 10 years,” Kell said. “And they are willing to come every year.”
He added, “For whatever reason it wasn’t dealt with.”
He said the city’s financial advisor is on top if the issue and ready to work with the city on how to address the unfunded liability.
“It’s quite frankly water over the dam and you have to address it now before it gets worse,” Kell said.
Kell gave the council information about drainage problems on Spring Street in the industrial park.
“Two of your major companies, both Walker Forge and Creative Converting are having some major water problems on Spring Street,” Kell said. “Their parking lots flood.”
He said that Creative Converting sent him a video of water coming into their building where electrical panels are.
The problem is the storm sewer on Spring Street isn’t large enough to handle all the water coming from the drainage basin, Kell said.
Kell said a larger storm sewer could be installed on the north side of Spring Street at a cost of $100,000. This would solve Walker Forge’s problem, but not Creative Converting’s problem.
He said a more likely solution would be a parallel third storm sewer on the south side of Spring Street to solve the problem at Creative Converting. Kell said this could be a $300,000-$400,000 project.
The city has to address the issue as the water problem is serious, Kell said.
He suggested the city take a comprehensive look at the situation before it decides on improvements.
Kell said he continues to have conversations about the Angelus sale with City Attorney April Dunlavy.
“On the one hand some things have taken place here that probably weren’t in the best interest of the city and maybe shouldn’t have occurred, and that’s the sale of the property without the city council being involved in that decision,” Kell said.
He said he and Dunlavy still feel the city is protected by the TIF development agreement that is in place.
Kell informed the council there was a consent form signed off on in 2013 by the former city administrator that allowed for the assignment of the property and purchase agreement to the successor.
Kell said he has had discussion with Lisa Kotter about this issue. He said she said her understanding of this was that she was signing off on this relative to the city parking lot and the city parking agreement only.
Kell said the way he reads it, it refers to the development area, not the city parking lot.
Despite that, Kell said the thinks the city is still in a good legal position to recoup what is owed to the city.
“I think the outcome is going to be a positive resolution for the city,” Dunlavy said. “There were probably some things done and not brought before the council eyes that should have been when they happened, but I think moving forward it’s going to resolve itself in a positive direction.”
The council unanimously approved allowing Dunlavy to request a title examination for the property. Aldermen Mark Doornink, Bill Zeinert, and John Wilson were excused from the meeting.
Kell informed the council that on March 18 the investigator sent a letter to Tricia Rose, who had filed the complaint with the city, indicating the complaint contained insufficient information for him to proceed with the investigation. The complaint also wasn’t verified before a notary.
Rose’s response was filed on April 10, and it was notorized.
“It’s back in the investigator’s hands at this point,” Kell said.
Kell informed the council that the city is in the process of updating the city’s zoning map. He said the map was outdated and 40 changes needed to be made.
He said a digital map will be completed. He also suggested the city shouldn’t let the map get outdated.
During the process the city found that some areas of the city aren’t zoned properly.
“We have to get that corrected,” Kell said.