Oops

This week

Economic Development Authority Meeting

Let's go through a bit of a history with the Otsego Economic Development Authority. It was stated in this meeting - and in Council meetings prior - that the EDA has used lease revenue bonds before... implying that this was nothing new for Otsego. Of course, lease revenue bonds have never - in the history of our city - been used this way.

Although, to be clear, it hasn't exactly been used in a way that I would consider to be in the interests of economic development, either. The formation of the EDA starts only a couple months before it was actually created. The Council heard some recommendations on the benefits of the EDA and how other cities were using them to their advantage in July of 1992. At the time, the design for the new city hall was well underway - the building that is now known as Prairie Center where the Council still meets. While the quotes for the new city hall building were being approved, the consultant that the Council had hired to explore the EDA pointed out that financing the new city hall without first getting permission from the voters was a problem. They had to reverse course and cancel the payments. Oops.

The Council quickly moved to establish the EDA over the following month. By the end of August, they hired a new consultant and had the paperwork ready for an EDA. That was authorized after a public hearing in September of 1992. The next month, the EDA met and started on getting a bond put together for the construction of the new community center. Why was it changed from a city hall to a community center? It's not clear, but I suspect it has to do with the fact that they used the wrong law to establish the bond... rather than use the EDA powers (MN § 469.090 - 469.1082) that they had just given themselves, they used the HRA powers (MN § 469.001 - 469.047) that they didn't have, and established a redevelopment district. Oops.

Fast forward to 2007 and the EDA is once again looking to finance another city building: the public works building (which is now public works and city hall). The minutes from these meetings aren't online, and I haven't bothered to ask staff to try to dig through the boxes to get them, but I did ask for the resolution that authorized the bond. The EDA Resolution 2007-01 was passed on February 26th, 2007 for a total cost of $4.9MM. However, the bond doesn't have a development district, which is required under MN § 469.101 - the same law that is now being referenced for the current EDA to hold a public hearing. It looks like they didn't have a public hearing back in 2007. Oops.

The EDA is required to submit an annual report to the Council on the state of economic development within the city. Based on my thorough review of the available public record: it appears that hasn't been done since at least 2012. Oops.

We're also supposed to meet every two years to establish a depository for the EDA. That hasn't been done for at least a decade. Oops.

And, of course, the EDA is supposed to submit an annual budget to the City Council so that it can be included in the city budget process and then be part of the annual city budget. This would make it part of the annual public hearing on the budget and make it subject to scrutiny and review of the taxpayers and citizens of Otsego. That hasn't been done since 2012. Oops.

Now, the EDA is being used to increase taxes on residents and prevent them from petitioning against the use of taxpayer funds in this way... big oops.

Without a budget, the EDA has no money, and when I made that point to the Commissioners, the response was to just not take a salary - which doesn't really address the issue.

Can City Council Members or Commissioners of the Economic Development Authority refuse to be paid? At first glance, it may seem like a silly question - why would anyone be forced to take a salary? However, it has come up before - at least at the federal level. US Code (31 U.S.C. 1342) forbids US Government officials from refusing a paycheck for a number of reasons, including prohibiting voluntary service. The Government Accounting Office issued opinion B-206396.2 in 1988 that states it is illegal for Members of Congress to refuse their salaries. Salaries are fixed by law and part of the covenant of accepting public office. Not taking a salary could potentially undermine the integrity of the office, and give rise to suspicions that the official is being compensated in other, non-statutory, ways.

State and local officials are different, though. We're less permanent fixtures of the government, and often have full time jobs outside of our roles in office. I haven't been able to find any similar State statutes on the prohibition of voluntary service, and the law on city official salaries (MN § 415.11) states that cities may by ordinance fix their own salaries. However, Chapter 7 of the City Code is clear in that Council Members shall be compensated. The same language is used in the EDA Establishing Resolution and State statute on EDA compensation: shall be compensated. The same State law also prevents Council Members from reducing their salary for more than one year - which, again, supports the idea that a salary is mandatory.

Additionally, a memo from the City Attorney back in 1998 stated that the compensation for the EDA could be set to $1 - implying that it cannot be zero. What this means, to me, is that the salary cannot be refused, and doing so would potentially be a violation of the law - even if it is a trivial one.

All that said, it is clear that it has been the curiously consistent practice for over a decade for Commissioners of the EDA to not take a salary. In the Special Compensation reports every EDA Commissioner has marked "N/C" or no charge for their meetings. Records do not go back further than 2012 for this practice, so it's not clear if Commissioners did this when the EDA actually had a budget, but I suspect they did take a salary during those years. And before you think this may be some sort of noble act to save the citizens the $25 tax burden, remember that the same Commissioners would charge for other meetings; it's only the EDA meeting that wouldn't be charged.

I found that fact an oddity until I saw the reaction by the EDA Commissioners when I brought up the issue; the response was to just not take a salary... offered by the Mayor. Let's just all agree not to charge for the meeting... right? It's worth noting that - in the private sector - if I had ever applied that kind of pressure to an employee to not get paid overtime or come in and work for free... I would have been promptly fired. What it shows is that this issue of not having a budget has been a conscious choice in the past.

And, let's be clear: it's not about the $25. It's the symptom of a much larger problem. The EDA has been undoubtedly defunct for more than a decade. There have been meetings, but they have been lacking in decisions or resolutions. For many years, the EDA has only met once per year in order to meet it's statutory requirement of establishing a newspaper and electing officers. For the past 4 years, it didn't even do that. Since 2012, it hasn't even had a budget or identified a depository (which is required under the Establishing Resolution and State law). What this shows is that the EDA was resurrected for the express purpose of avoiding a petition by the citizens, and this necromancy has consequences.

City Council Meeting

The City Council met on Monday as part of its regular meeting. On the agenda was a review of the audit for the 2023 budget. After a few questions, the audit and Annual Financial Report was approved.

We also discussed the prohibition on cannabis ordinance. I voted "no" on this ordinance because it's ultimately a pointless ordinance, in my opinion. Cannabis use and sales were authorized by the Legislature, and the licensing for those businesses goes into effect on January 1st. Many cities have adopted prohibition - or "moratorium" - on cannabis sales. However, these moratoriums have no effect since they must end by January 1st... which is when the licenses are supposed to go into effect. Cities that have adopted these do-nothing ordinances are really just using smoke and mirrors to distract from the fact that they have no authority under the new laws. And I'm not the first to point this out. Council members in other cities have voiced their opinion and voted no on similar prohibitions.

Next Week

Planning Commission Meeting Canceled

The Planning Commission would normally meet on Monday of next week. However, the meeting has been canceled due to a lack of agenda items.