Port looks to climb out of debtIn the past six years the Red Wing Port Authority has seen its ledger run $1.2 million into the red. Now port and Red Wing city officials say the agency must find a way to climb back into the black.
By: Jon Swedien, The Republican Eagle
In the past six years the Red Wing Port Authority has seen its ledger run $1.2 million into the red. Now port and Red Wing city officials say the agency must find a way to climb back into the black.
City Council and Port Board members will meet Oct. 14 to hammer out policy changes to steer the economic development agency back onto steady financial ground.
"We've had a lot of discussions about how do we rectify (the debt) and why that was allowed to happen," Port Board member and City Council member Ralph Rauterkus said at the port's last meeting. He is one of two council members who sit on the Port Board.
Most of the port's debt is actually owed to the city. It was incurred by holding land in the River Bluffs Development, located off Tyler Road South.
The city assessed the property for road, sewer and utility improvements. The port owes $878,000 in assessments on 35 acres it still owns in the development.
Myron White, Port Authority executive director, said developing river bluffs has had a considerable upside. Developments in the park — such as Menards and Hydro Control — generate $1 million in property taxes annually and have brought 859 jobs to Red Wing, he said.
But because the agency has been unable to pay the assessments it owes, the city has held the port's debt on its books. This has had a negative impact on the city's fund balance — financial reserves the city uses to maintain cash flow throughout the year, which can also be used for emergency spending.
Meanwhile, the slumped real estate market has only exacerbated the port's debt problems.
The port has not made a land sale yet this year. Historically, land sales have been a major source of revenue for the agency.
Port officials have typically budgeted $200,000 to $250,000 a year in anticipation of land sales. The agency has budgeted zero dollars for them in 2010.
Port Board member and City Council President Mike Schultz said he's hopeful the port will make some land sales in 2010, which would help eliminate the agency's debt.
But he said it would likely take a number of sales to completely eliminate the problem.
"It took (the Port) six years to get there," Schultz said. "It'll take some years to get out."
A lack of land sales has, in part, led the port to ask city officials for a $130,000 transfer from the city's coffers to the port's.
The request comes at a time when the city is already struggling with its own fiscal challenges.
However, City Council Administrator Kay Kuhlmann said that transfer is currently in the city's budget for next year and council members will review it at an upcoming budget workshop.
Prior to 2003 the city regularly transferred money to the port, according to city officials. The practice ended, one of a number of factors contributing to the agency's mounting debt.