City Council Work Session on Economic Development Authority (EDA)

The purpose of today's City Council Work Session was to formulate a Council position to give to the EDA to resolve the financial problems at both Superior National and the Cedar Grove Business Park. In attendance at today's work session were Mayor Hakes, Councilors Costello, Kennedy, Lenz and Sivertson, City Administrator Mike Roth and City Finance Director Kim Dunmoor. Also in attendance were the City's representatives on the EDA Board, Hal Greenwood and Mark Sandbo.

(Reminder: The EDA, along with members of the West End Business Community, presented an idea for long term stewardship of the Golf Course which included: 1) The County will payoff the remaining Superior National bonds of $440,000, 2) The County will invest $1.2 million dollars of 1% Sales Tax monies for equipment, irrigation and course improvements, and 3) The County will increase the levy by $140,000 annually to fund future golf course capital needs.)

Mayor Hakes opened the meeting with some general remarks framing the problem from her perspective which are summarized below:

The purpose of today's meeting is to formulate the City Council's position for the EDA regarding the financial struggles at Superior National Golf Course and the Cedar Grove Business Park. At the risk of speaking for others, it seems quite apparent that we all agree that Superior National is a valuable and important asset to the County, is in need of capital improvements and is in need of financing and marketing to restore the course and increase rounds. We also agree that our County economy is driven by Tourism.

But, as the Mayor, I believe it is important to frame the EDA's problem from the City's point of view. The City of Grand Marais faces serious financial challenges both today and in the future. The State of MN predicts a $5-8 billion deficit in 2011. As a result, the City can basically be assured of further reductions in State Aid (LGA and MVHC). Much of the City's financial worries are in large part due to the EDA's Business Park debt of $1.6 million (well over $2 million with interest) and an annual payment of approximately $130,000 over 20 years that is paid entirely by City taxpayers.

I feel strongly that before we consider any increased spending/debt at Superior National, we need to address the $2 million problem we have at the Business Park. We (the Council) represent the people of Grand Marais and it is unfair for them to absorb this enormous debt without County assistance. The EDA is a joint effort between the City and the County. The EDA needs to work as diligently on the Business Park problem as they do on Superior National. I fear that if the County accepts the solution currently recommended by the EDA that our opportunity to get financial support from the County for the Business Park will be lost forever. As Mayor of Grand Marais, I'm not willing to let that happen.

What ensued after these remarks was an impassioned conversation between the Mayor, the Council and the City's representatives on the EDA Board (Sandbo & Greenwood). I will not attempt to speak for the others, only myself. I openly admit that I was very intense in my arguments because I am zealous in my commitment to represent the taxpayers of Grand Marais, as well as the taxpayers of the County, to the best of my ability.

I firmly believe the following:

1. The Cedar Grove Business Park debt is the responsibility of the EDA. If the EDA is unable to pay this debt, it should be the joint responsibility of the City and the County.
2. The EDA should resolve the financial debt at the Business Park before supporting any further spending.

In the end, the Council unanimously passed a motion to ask the EDA to include the Bond Payment for the Business Park in their budget and levy request.